https://alamrafiul.com/tags/npv/ Recent content in Npv on Rafiul Alam https://alamrafiul.com/papermod-cover.png https://alamrafiul.com/papermod-cover.png Hugo -- gohugo.io en Sat, 15 Mar 2025 00:00:00 +0000 https://alamrafiul.com/blogs/valuation-investment-math/ Sat, 15 Mar 2025 00:00:00 +0000 https://alamrafiul.com/blogs/valuation-investment-math/ <ol start="2014"> <li></li> </ol> <p><strong>WhatsApp acquisition by Facebook: $19 billion.</strong></p> <p><strong>Everyone thought Zuckerberg overpaid.</strong></p> <p><strong>The numbers at the time:</strong></p> <ul> <li>55 employees</li> <li>$20M annual revenue</li> <li>Minimal profits</li> <li><strong>$345 million per employee</strong></li> <li><strong>$40 per user</strong></li> </ul> <p><strong>The critics calculated:</strong></p> <p>$$ \text{Revenue Multiple} = \frac{$19B}{$20M} = 950x $$</p> <p><strong>&ldquo;Insane valuation! Facebook wasted billions!&rdquo;</strong></p> <p><strong>But Zuckerberg saw different numbers:</strong></p> <ul> <li>450M daily active users (growing 20% annually)</li> <li>Network effects getting stronger</li> <li>WhatsApp replacing SMS globally</li> <li>Engagement higher than Facebook Messenger</li> </ul> <p><strong>He calculated the NPV (Net Present Value) differently:</strong></p>