In what can be thought of as either sheer Silicon Valley insanity, or a wise defensive move, Facebook’s Mark Zuckerberg picked up WhatsApp – a four-year-old communications app – for a total price tag of $19 billion.

Let’s have a look at how this breaks down in the numbers:

  • $4 billion in cash, and;
  • approximately $12 billion worth of Facebook shares, and;
  • an additional $3 billion in restricted stock units to be granted to WhatsApp’s founders and employees that will vest over four years subsequent to closing.

That’s not far off 10% of Facebook’s current market cap. Does that really make good financial sense?

Let’s dig into WhatsApp’s numbers a bit more:

  • Over 450 million people use the app each month;
  • 70% of those people active on a given day;
  • Messaging volume approaching the entire global telecom SMS volume; and
  • More than 1 million new users register every day.

So, yeah, that seems like a pretty robust business from an activity perspective.

WhatsApp Growth Rate at Acquisition by Facebook

The diagram above shows something that Zuck clearly found alarming – WhatsApp is the most infectious, fast-growing service that the Internet (and the world has seen). Astoundingly it’s more prevalent than Snapchat! If you take a moment and take a look at it from Facebook CEO’s perspective, you can see that his utilitarian social service (a powerful address book and photo album with a strong messaging bent) is being overtaken by another – much simpler, more focused – messaging tool.

Options? Beat them, or buy them.

“WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” said Mark Zuckerberg, Facebook founder and CEO.

At its current growth rate, WhatsApp will hit the 1 billion user mark in no time. It took Facebook more than twice as long to hit that number.

“I’ve known Jan for a long time and I’m excited to partner with him and his team to make the world more open and connected.”