Facebook (FB) - Get Report is reportedly buying Giphy, the tech giant’s second deal of the of late this year. This comes as Facebook is hoping to see earnings march higher in 2020, through pandemic headwinds, while it leverages its exceptionally strong balance sheet.
According to Axios sources, Facebook is buying Giphy, the tech company that makes GIFs and distributes them on various platforms, for $400 million. Facebook said in a blog post it is buying Giphy in order to put the GIFs on Instagram to better help users express themselves, in an apparent move to drive incremental engagement.
Earlier in 2020, Facebook bought a 9.99% stake in Jio, an Indian online platform of sorts, for $5.7 billion. India’s e-commerce and digital advertising market is fast-growing, a market U.S. tech giants want to get their hands on.
Recently, Facebook has spent roughly $6.1B on deals, although it’s not completely clear Giphy deal is an all-cash deal, though it most likely would be.
Facebook’s financial position is exceptional, with $60 billion of cash, no debt and an earnings outlook for 2020 that hopes for 13% year-over-year growth. Those estimates are still lower than they were at the beginning of the year, but they don’t call for contraction.
Investors will be looking for how Facebook will fully monetize these new assets but the company is in solid position to make these purchases.
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