FB Stock: This Could Be Facebook’s Biggest Asset

Facebook Biggest AssetThis App Could Be Huge for FB Stock

Facebook, Inc. (NASDAQ:FB) had an unlikely confirmation of the power of WhatsApp and the wisdom of its investment in this application. WhatsApp might just prove to be one of the biggest boosters of FB stock. According to data from research firm Opinion Box, anywhere from 86% to 90% of Brazilians have used WhatsApp (that would make it about 190 million people), making it the most used app in the country above Facebook. (Source: “WhatsApp blocked in Brazil for 48 hours by court,” The Guardian, December 17, 2015.)

Despite the exorbitant cost, acquiring WhatsApp was not an option for Mark Zuckerberg, who clearly saw that the instant messaging service was going to add considerable value to FB stock. The instant messaging sector is booming and Facebook needed the strongest possible product because its own “messenger” failed to achieve a leading position.

People use a specialized, or dedicated, app for chatting and judging by the numbers, this tendency is especially important in markets outside of North America. Facebook Messenger did have some good user numbers in North America, but in Europe and Asia, WhatsApp is dominating. Among other things, the market for this type of communication is highly fragmented and only a few have managed to aggregate millions of users.

Therefore, if Facebook had not acquired WhatsApp, it would have left the biggest player in the fastest growing sector of social media open to competitors. The long-term strength of FB stock depended on it. And WhatsApp is picking up users at a rate much higher than that of Facebook itself, especially in the emerging markets, such as India, Mexico, and Brazil.


On August 7, 2015, the company was sent a new notification and a fine was imposed for not complying with the request. Since WhatsApp has not responded, says the decision, justice imposed an end, with a 48-hour. The measure bothered users, which, in Brazil, represent 90% of the population, about 93 million people.

Every day, some 30 billion text messages are exchanged through WhatsApp and that’s why Facebook shelled out $19.0 billion to buy the popular platform, which can count on a billion users. WhatsApp has done nothing short of sending previous messaging platforms, like Messenger and even text messages, into retirement. Ironically, it has taken a shutdown of the service to demonstrate that WhatsApp is no longer just an app, but an essential service and a major value contributor to FB stock.

The Brazilian government-ordered shutdown showed that if the service is interrupted, or if it is blocked or hampered for whatever reason, the consequences are significant.

Given its market position and capabilities it has developed in the messaging sector, Facebook is the company that can understand how to exploit WhatsApp better than anyone in the digital economy, enhancing it. Having incorporated the service, Facebook stock can benefit from the company being better able to set up protection against the incursions of “intelligence” and communication blocks. The Brazilian example has proven the power and influence of WhatsApp. (Source: “WhatsApp Moves To Protect Messages From Snoops,” Forbes, November 19, 2014.)

WhatsApp Is the Most Popular Messaging App

Indeed, WhatsApp has more users than Facebook Messenger in Europe, Latin America, Africa, and Australia, which is helping Facebook become a global communication network, a veritable alternative to the mainstream carriers, even while remaining the world’s “social network.” (Source: “You May Not Use WhatsApp, But the Rest of the World Sure Does,” Wired, February 20, 2014.)

It remains to be seen how Facebook will be able to monetize its investment and the reaction of the users of WhatsApp to predictable commercial exploitation of the application, including advertising and use of data. The important thing for holders of FB stock is that the company owns WhatsApp.

The Brazilian interruption had nothing to do with Facebook itself or a technical glitch. A Brazilian judge imposed a 48-hour-long suspension for Whatsapp throughout the country, which happens to be the largest and most populous in South America, disrupting the service for about 100 million Brazilian users for more than 48 hours.

Shortly thereafter, Whatsapp went back online and Mark Zuckerberg made the announcement on Facebook, thanking all users, who had rebelled against the blockade: “please make your voice heard and help your government reflect the will of its people,” said the Facebook founder. (Source: “Zuckerberg ‘Stunned’ After WhatsApp Blocked in Brazil,” NBC News, December 17, 2015.)

Zuckerberg added that Brazil has worked to establish an open Internet: “I am stunned that our efforts to protect people’s data would result in such an extreme decision by a single judge to punish every person in Brazil who uses WhatsApp… We hope the Brazilian courts quickly reverse course.” (Source: Ibid.)

A court in Sao Paulo was responsible for ordering the reopening of WhatsApp, justifying the counter-order by noting, “it would not be reasonable for millions of [WhatsApp] users to be forced to suffer hardships because of the company’s liabilities.”

This is the decisive factor: the ruling that has demonstrated the essential nature of WhatsApp and the fact that it is no longer a simple app, but a considerably important social routine that millions of people share every day.

WhatsApp and the reaction to the temporary ban have proven that social networks like Facebook are a reality and that whether we like it or not, the world is addicted to digital communication. It is not even necessary to consider the more nuanced considerations as to whether new technologies helped society improve or grow; the point is that social media is here and that considerable improvements in society in general and in the behavior of the individual in particular. Such is progress, whether we like it or not, and FB stock relies on this.

Why Was WhatsApp Blocked?

Many Brazilians were shocked, but probably not surprised by the government-mandated Whatsapp blackout, given pressure from telecommunications companies on the government in Brasilia. However, the motivation appears to be related to an investigation into a drug smuggling ring; WhatsApp refused to cooperate with authorities by not providing the requested data.

In fact, the government has long targeted Whatsapp users because its popularity has led consumers to straying away from telecoms and their related text services. Eduardo Cunha, the president of the lower house of the Brazilian parliament, a very influential person and close to one of the main telecoms, is suspected of having influenced the blackout. Cunha, moreover, opposed regulation approved a year ago over net neutrality in Brazil.

The precise reason for the block was not revealed because of judicial secrecy, but it is in connection with a judicial order of July 23, 2015 that WhatsApp has not responded. The first criminal court of São Bernardo do Campo said in a statement: “WhatsApp did not respond to a court order, dated 23 July, 2015. On 7 August, 2015, the company was notified again of being subject to fixed penalty in case of non-compliance.” (Source: “WhatsApp blocked in Brazil for 48 hours by court,” The Guardian, December 17, 2015.)

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