Is this the beginning of the end?

The Whatspp acquisition by Facebook looks like we are in a bubble, where valuation is based on number of users  - granted these are  ”engaged users” however, paying $19bn is crazy, especially if you are going to make 99c per user in the best possible case. The original Whatsapp model is one where the user is not served any ads and Whatsapp has no intel on the user based off their messages. How then would Facebook monetize this acquisition?

It would take Facebook 42 years to break even, paying $42 for a user, where in the best case you are only going to make 99c per user. I want to see the assumptions in the financial model to see how Facebook is going to monetize this. Begs the question – is this the beginning of the end?

In the world where 90% of the companies are valued on profit and revenues, isn’t this crazy that we value companies based on users and expect them to be profitable one day.

Some people might argue that Facebook got the users for much lower valuation than their current base. Facebook has 1bn users with 173bn market cap ($173/user) while they only paid $42/user. But are these users the same  in terms of revenue and profitability- atleast not to the native eye. Facebook has revenue of $8bn meaning each user brings in $8 vs Whatsapp user bringing in $1/year. Clearly, wall street is sensing this and in after hours shares of Facebook were down 5%.