The reason: Facebook paid mostly in stock for WhatsApp. Of the $19 billion purchase price paid back in February when the deal was announced, $15 billion of it was using Facebook stock that -- at the time -- was trading north of $65 a share.
The stock went up after that for a while but has come down significantly in the last month to current levels in the $56 range.
So the purchase price has gone down from $19 billion to a current level of $17 billion using Monday's stock price. It's still not a bad price, but it does have some big implications.
At the time the deal was announced, many pointed to Facebook valuing each WhatsApp user at $42. That per user price is down to $37 with the reduction in the total purchase price. This, then, has an effect on the potential value of other messaging apps like Line -- which is rumored to be going public later this year -- as well as private services like Kik and public services like BBM, which is owned by BlackBerry (BBRY).
In the case of BlackBerry, it recently announced during the earnings call that it has 85 million monthly active users (or MAUs). At $37.77 per user (with the current implied WhatsApp valuation), that comes out at a whopping $3.2 billion that BBM is potentially worth. All of BlackBerry has a market cap currently of $4.2 billion.
Facebook has a long history of paying with stock for big acquisitions. Just prior to its initial public offering a couple of years ago, they bought Instagram for $1 billion. Then Facebook's stock dropped after the IPO and many people liked to point out that Instagram was only worth $700 million due to the component in stock they took. Yet, at today's Facebook valuation, that deal actually valued Instagram at $1.6 billion because a majority of it was paid for in stock.
So, even though WhatsApp's implied valuation has dropped along with Facebook's stock price, what the deal is truly worth to Jan Koum will only truly be known in a few years from now.
The WhatsApp deal -- or the more recent Oculus deal -- offer a similar upside for CEO Mark Zuckerberg. If it's a bust, he's only given up stock and not cash. If it works out, as it did with Instagram, he's paid very little in cash to make it happen.
At the time of publication the author is long BBRY.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.