What Is Mark Zuckerberg Telling You With His Big Acquisitions?
Mark Zuckerberg seems excited about Facebook’s (NASDAQ:FB) acquisition of Oculus. In a Facebook post, Zuckerberg said, “Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face — just by putting on goggles in your home.”
He then added that, “This is really a new communication platform. By feeling truly present, you can share unbounded spaces and experiences with the people in your life. Imagine sharing not just moments with your friends online, but entire experiences and adventures.” Sounds exciting, huh? Of course it does. But the problem is that with Oculus — as well as WhatsApp — Zuckerberg’s not only pulling out his wallet, but also a boatload of stock.
In a five week span, Facebook has announced plans to spend up to $21.3 billion, including $19 billion for WhatsApp and $2.3 billion for Oculus. Investors have continuously argued the meaning of these two acquisitions, as most note that while WhatsApp may have 465 million monthly active users (MAUs), it earned just $20 million last year. However, the bigger deal — rather than speculating on what these companies may or may not become — is the amount of stock that Zuckerberg has used to purchase these companies.
At the end of 2013, Facebook had $11.5 billion in cash and short-term investments, but combined is spending $4.4 billion of that cash on WhatsApp and Oculus. The remaining $16.9 billion will be paid in common stock and restricted shares. With that said, WhatsApp payout will be given over a period of four years, although an undisclosed bulk will be paid upfront.