The shares of BlackBerry Ltd surged following Facebook Inc.s decision to acquire WhatsApp Inc. for 19 billion dollars underscored the value of mobile messaging, including BlackBerrys competitive service.
Yesterday Facebook Inc. revealed that it is purchasing WhatsApp for 12 billion dollars in stock, 4 billion dollars in cash and 3 billion dollars in restricted shares for the application that provides users with the opportunity to send messages on mobile devices, which are based on different operating systems. BlackBerry, which offers its instant-messaging service BlackBerry Messenger on the companys handsets or as a free download for iPhone and Android smartphones, surged to 9.82 dollars in late trading yesterday.
The BlackBerry Messenger service, which has 80 million monthly users is valued at about 3.4 billion dollars, compared to BlackBerrys market value of 4.7 billion dollars. John Chen, who is currently the Chief Executive Officer of BlackBerry, highlighted the BlackBerry Messenger service as fundamental for the companys growth which would hopefully help it bring a new life to its smartphone business.
One of the Internet analysts working for Bloomberg Industries – Praveen Menon said: “Facebook’s rich valuation per user for WhatsApp confirms that instant-messaging apps lead the next Internet gold rush. The steep valuation could be a positive signal for rival messaging apps such as WeChat, Line and Kakao, as well as BlackBerry’s BBM service.”
Currently, WhatsApp Inc.s service is very popular in Europe. About 1 million users are believed to join the service on a daily basis. Yesterday the Chief Executive Officer of Facebook Inc. – Mark Zuckerberg – shared during a conference call that he expects more than 1 billion people worldwide to sign up for the service in the next few years.
Traditional text messages are usually paid through the mobile-phone plans of the customers, while WhatsApp is free for the first year and then is charged 99 cents a year after this period. In 2013 BlackBerry made its BlackBerry Messenger free of charge.
The spokeswoman of BlackBerry Lisette Kwong failed to come up with an immediate comment on the situation.
BlackBerry Ltd rose by 3.88% on NASDAQ to $9.36 by 14:45 GMT. According to CNN Money, the 29 analysts offering 12-month price forecasts for BlackBerry have a median target of $7.00, with a high estimate of $11.00 and a low estimate of $3.02. The median estimate represents a -25.21% decrease from the last price.
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