By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) -- Facebook Inc. shares fell
Thursday as investors and analysts weighed in on the
social-networking giant's $19 billion acquisition of
mobile-messaging company WhatsApp.
Facebook (FB) was off by 2.6%, to trade at $66.31 in the wake of
the deal announced late Wednesday. The deal includes $12 billion in
Facebook stock, $4 billion in cash and $3 billion in restricted
stock. Facebook intends to use WhatsApp to strengthen its position
in the market for messaging on smartphones and other mobile
devices.
WhatsApp has seen its popularity explode since it was founded
five years ago, and the company claims to have 450 million active
users and is adding another 1 million every day.
See commentary: What's up with Facebook's $16 billion WhatsApp
deal
Analysts were mixed regarding their sentiment about the
acquisition. Ken Sena, of Evercore Partners, cut his rating on
Facebook to equal weight from overweight and lowered his price
target on the company's stock to $60 a share from $70. In a
research note, Sena said he was concerned that the "cost of
delivering engagement through acquisition seems excessive," as
Facebook paid $42 for each WhatsApp user, while the company
currently generates just 99 cents for every user.
However, Arvind Bhatia, of Sterne Agee, called the acquisition
"strategically sound" and that "the potential size of the user base
and strong engagement on WhatsApp should ultimately lead to
meaningful monetization."
Apple Inc. (AAPL) also dipped into the red, down by $2.42 at
$534.95 a share. Analyst Ben Reitzes of Barclays cut his rating on
Apple to equal weight from overweight, saying that he isn't
convinced that new products like a smartwatch or a TV, "could move
the needle like new categories did in the old days." As a result,
Reitzes said he expects Apple's shares to remain close to their
current trading range for the next year.
Hewlett-Packard Co. (HPQ) slipped by 11 cents a share to $29.32
in advance of the tech giant's fiscal first-quarter earnings
report, due after the close of trading. H-P is expected to report a
decline in sales as it deals with sluggish business in the
corporate IT market.
Groupon Inc. (GRPN) rose 2% to $10.23 a share ahead of the
online daily deal and e-commerce company's quarterly results, set
for after the market closes.
Among other leading tech stocks, gains came from Netflix Inc.
(NFLX), Microsoft Corp. (MSFT) and IBM Corp. (IBM). The Nasdaq
Composite Index (RIXF) rose 14 points to 4,252.
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Facebook shares slip on reaction to WhatsApp deal
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