No wonder Whatsapp is worth $19 Billion

No wonder Whatsapp is worth $19 Billion

Until recently Diabetic Investor thought it was only the diabetes space that was wild and wacky but with the recent news that Facebook was acquiring Whatsapp for $19 billion shows that diabetes is not the only wacky world. Besides its lofty valuation, what made this deal seem so wacky is that Facebook couldn’t explain how acquiring Whatsapp would help the company make money. Granted this may seem like a minor point to the folks out in Silicon Valley but to the folks on Wall Street when a company dishes out $19 billion it should get something more than a warm and fuzzy feeling.

While most analysts are struggling to understand why Facebook paid $19 billion, Diabetic Investor believes we have discovered the hidden value of the deal one that ties the wacky world of diabetes to the equally wacky world of text messaging. According to a study coming out of the University of Michigan text messaging can reduce the risk of a person developing Type 2 diabetes. According to the research a majority of people enrolled in txt4health, a customized texting service that was piloted in Detroit and Cincinnati last year, said the free mobile education program made them more aware of their diabetes risk and more likely to make diet-related behavior changes and lose weight.

Lorraine R. Buis, lead author of the study and an assistant professor in the Department of Family Medicine at the university’s Medical School, said researchers found that the mobile method of health intervention had great reach and potential to significantly influence health habits.

“It’s clear that a text message program may not be appropriate for everyone; however, for a large subset of people, this may be a feasible, acceptable, and useful strategy to motivate positive behavior changes,” she said.

Think what it would mean to Facebook if they can translate the results of this study into helping patients either avoid Type 2 diabetes or help patients with Type 2 diabetes better manage their diabetes. As we have pointed out diabetes is growing at epidemic rates across the globe. Diabetes is not just a healthcare crisis but an economic crisis given not just the high cost of managing diabetes but the equally high costs that come from patients with poorly controlled diabetes.

In many respects this deal by Facebook could be viewed as defensive given that Google and Apple are also entering the wacky world of diabetes. While Google and Apple are screwing around with way cool devices, Facebook’s approach can be viewed as more practical as most everyone knows how to read and send a text message.

So there you have it the hidden reason as to why Facebook paid a whopping $19 billion for what is basically a text messaging app. The driving force behind this deal is diabetes, now how wacky is that?