Forbes billionaire list gains two new members

The Financial Focus:

On the 19^th of this month, Facebook’s Mark Zuckerberg made the announcement that the popular messaging app, WhatsApp, would be joining the Facebook team. Jan Koum and Brian Acton, the founders of WhatsApp, agreed to have the company mirror the role of Instagram as a separate entity of Facebook.

WhatsApp is the global leading messaging app with roughly 450 million users a month [1] and an estimated 50 billion messages sent per day [2]. What does an acquirement of this magnitude go for on the open market? Apparently, $12 billion in Facebook stock, $4 billion in cash, and $3 billion in restricted stock over the next four years, totaling the deal to a whopping $19 billion [3].

The $19 billion dollar price tag is not the only jaw-dropping statistic of this buyout. For starters, WhatsApp has 55 employees and its $19 billion dollar buyout means each individual employee is worth barely under $350 million dollars*. Of the recent pricy buyouts (Instagram for $1 billion, Nokia for $7.2 billion, Motorola for $12.5 billion, Tumblr for $1.1 billion, and Skype for $8.5 billion), WhatsApp’s buyout exceeds the steepest one by $6.5 billion [4]. To put $19 billion dollars into perspective, WhatsApp is worth more than the following companies: Ralph Lauren, Best Buy, The Gap, Southwest Airlines, Under Armour, Marriot International, Monster Beverage, Xerox, and Chipotle [3].  The buyout is larger than any of Google’s, Apple’s, or Microsoft’s buyouts, and the company is only five years old [3].

So, is WhatsApp’s bang worth its buck? Well, there is one factor that indicates future growth. The app doesn’t use traditional revenue seeking techniques through ads; instead, they charge a 99 cent fee per year after the first year free [1]. This would explain the exponential growth WhatsApp has encountered over the last five years [3]. The cheap strategy attracts more users than any other social media company, including its new owner.

Zuckerberg plans to finalize the acquisition by the end of 2015 [3]. As they say, it is not official until it is Facebook official.

Sources

[1] Wall Street Journal – wsj.com

[2] We Are Social – wearesocial.net

[3] Forbes – forbes.com

[4] Gizmodo.com

Entrepreneur of the Week: Dietrich Mateschitz

Background [1]:

-Born: May 20, 1944 (69 years old)

-Residence: Salzburg, Austria

-Education: Vienna University, B.S. in Business and Economics (took 10 years to complete program)

-Net Worth: $7.1 Billion (as of March 2013)

-Wealthiest person in Austria

-Marketing Mastermind

-Extreme Sports Loyalist

-Visionary

Accomplishments [2]:

1) Creator of the popular energy drink, Red Bull: He transformed the beverage industry by creating the energy drink industry in 1987. He co-created the product with his friend Chaleo Yoovidha, originally naming it “Krating Daeng.” Red Bull was created to cure his constant jet lag resulting from frequent business trips. He excelled in the early years of Red Bull by the image he created and the lure of his famous “Gives You Wings” slogan. The marketing style that proved successful at Unilever was used to recreate a lifestyle through exciting events, crossing over of industries, and simple cartoon commercials, which promoted the popular energy drink.

2) As Red Bull began to grow, Dietrich took control by exploiting his target crowd to the ones who needed high energy the mos – extreme sport athletes. The trend started by the creation of the Dolomiteenmann, which is the extreme sport version of a marathon. As he continued to shape the image of Red Bull, Dietrich decided to sponsor Motorsports athletes in the late 1980s. He expanded to sponsoring international athletes in 1994.  Currently, Red Bull’s extreme athletes are involved in Grand Prix Racing, Cliff Diving, Kiteboarding, Free Fall, Soapbox Racing, Down Hill Extreme Racing, Crashed Ice Events, X-Fighting, Air Racing, BMX Elevation, Rally Car Racing, Red Bull BC, Flugtag, and, Mateschitz’s favorite, Golf. He also backed the Supersonic Jump, which is a 39 km jump above the Earth from Space (record-breaking).

3) He transformed the music industry by creating the Red Bull Music Academy, the Red Bull Studio, and Red Bull Records.

4) Owner of the Hangar-7 in Salzburg that holds “The Flying Bulls,” which is a set of rare, Red Bull-owned planes.

5) Owner of an Austria Ice Hockey Team, the Red Bulls.

6) Owner of the Professional Soccer Teams FC Red Bulls in Austria and the New York Red Bulls.

7) Owns the Laucala Island of Fiji where he started a luxury resort.

Why Dietrich Mateschitz is Entrepreneur of the Week:

Dietrich Mateschitz saw a personal need that wasn’t being fulfilled and had the confidence to fulfill it himself. He used his energetic passion and marketing skills to transform over six industries, including the creation of the energy drink industry. His entrepreneurial determination and the development of Red Bull, sugar free preferred, has earned him this week’s Entrepreneur of the Week.

Sources

[1] Forbes – Forbes.com

[2] Red Bull Gmbh – redbull.com

Wall Street’s Watch:

Hot: Forest Laboratories Inc. (FRX)

Actavis plc, made the announcement on Presidents’ Day that it would be acquiring Forest Laboratories Inc. for $25 billion in cash and stock. The confidence of the market flooded Forest Laboratories’ stock value when it reopened Tuesday morning at $92.80 per share. The $21.41 per share increase from Friday’s $71.39 closing price displayed the stockholder’s concurrence. The Actavis acquirement was influenced by the voice of the billionaire investor, Carl Icahn, as he believed the merger would create a pharmaceutical giant. Since the acquirement, Forest Labs’ is up $5.42 per share. With a recent Credit Suisse downgrade to “Neutral” from “Outperform,” can Forest Labs’ go against the critics and rise in value or will Credit Suisse’s demotion drive its stock value south to its one year target estimate of $79.65?

Cold: Groupon Inc. (GRPN)

After Thursday’s closing price of $10.28 per share, Groupon opened at $8.74 per share Friday morning when its quarterly earnings were reported and has continued to fall since (currently trading at $7.78 per share). Analysts estimated that EPS was $0.06 per share, but this was failed to be met and is expected to be adjusted between -$0.04 and -$0.02 per share. The company stated that its recent acquirement of Ticket Monster for $260 million threw off analysts’ expectations, along with its higher-than-normal marketing expenses. Groupon did surprisingly beat expected revenue by nearly $50 million. As disappointing as Groupon’s EPS was to its stockholders, the expected revenue increase and acquirement of Ticket Monster question analysts with bullish hope. Is Groupon’s current value a correct reaction to earnings that will lead to further bearish market movements? Or is Groupon currently a Black Friday sale looking to spike?

Bold: Chelsea Therapeutics International Ltd. (CHTP)

After nearly a three year struggle, Chelsea Therapeutics International finally received FDA approval of the drug, Northera. The drug treats patients who suffer from symptomatic neurogenic orthostatic hypotension, and it is the first drug to treat this medical condition. The company’s market value has bounced back and forth between its high of just over $8.00 a share to its low of $0.79 a share, showing little promise of significant growth. This was all before the newly FDA approved Northera. Northera is Chelsea Therapeutics’ first notable drug, and may be the start to a significant increase in its stockholders’ confidence. The Wednesday morning release alone caused Chelsea Therapeutics’ market value to open $1.61 higher than Tuesday’s closing price. The game-changing FDA approval and the current price of Chelsea Therapeutics (currently $5.96 a share) create a perfect combination for serious financial gain. Have your six dollars go further than an M-T-O at Sheetz, and buy a share of Chelsea Therapeutics.

Source: Yahoo – finance.yahoo.com