Zuckerberg's Inspired Move

 | Feb 24, 2014 | 11:42 AM EST  | Comments
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tsla

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twtr

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goog

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scty

Maybe it's about the kids -- the kids who want a Tesla (TSLA), the kids who use WhatsApp to get around messaging charges, the kids who will one day dominate this stock market and who know a heck of a lot more than we do.

Mark Zuckerberg knows kids. He knows that a huge percentage of the 450 million users of WhatsApp will be thrilled to have this messaging service integrated into their Facebook (FB) page. I know my colleague David Faber was skeptical about my valuations this morning on CNBC, but I think Facebook bought this company on the cheap vs. what it would have to pay in the public market if WhatsApp had an initial public offering. While Facebook bought WhatsApp for $19 billion in stock and cash, I can peg the company at $30 billion, using valuations the current market is paying for Twitter (TWTR), LinkedIn (LNKD) and Yelp (YELP).

In fact, the head-to-head for Twitter is pretty compelling. Facebook is getting a faster-growing company for $42 per subscriber while Twitter, with a $31 billion valuation, comes in at $142 per user.

More important, Zuckerberg, who is 29, is more in touch than anyone else on the Internet when it comes to what others his age and younger are doing online. He knows that mobile is the future, and it's how he took his company's stock from zero to $50 and, soon after, $60. I am talking about 60% of traffic going mobile, which everyone knows is the fastest-growing market. Facebook wants to dominate social, mobile, the cloud and connectivity, and he needs to block Google (GOOG) at every turn. I bet Google wishes it had struck first, as this WhatsApp transaction has got a lot more going for it than any deal Google has done, with the exception of its YouTube buyout.

Facebook can monetize WhatsApp with higher fees, and it can integrate the service with high-quality advertising. It can also make it so that Facebook becomes even more a part of your identity than it is now. Do not forget that the kids have been getting around these messaging charges with WhatsApp for years, while I don't know a soul over 30 who has even heard of the thing. To youth go the spoils.

Tesla, unlike Facebook, is an extremely difficult animal to value, which is why I call it a "cult stock." Here's a very small company run by a very big-thinking CEO, Elon Musk, and Musk knows how to manage the making of both the best cars and the best stock. His earnings reports and conference calls are one-man bear-maulers.

In the span of a few pages last week, Musk revealed higher sales, higher gross margins, a higher forecast of cars to be sold and bigger markets, notably in China and Europe. He smashed the reservations: safety and fire concerns, the price of used cars -- they seem to be going up -- and the cost of batteries. In fact he turned the biggest worry, the economies of scale of batteries, into the greatest opportunity. He's proposing to soon roll out the Giga Factory, which will offer Henry Ford-like mass production for electric vehicles and beyond -- including for Musk's other enterprise, SolarCity (SCTY), which is due to report today after the bell.

You want contrast? Today's the birthday of the greatest inventor of our time, the late Apple (AAPL) founder Steve Jobs. Everyone is in his shadow, but the next three execs to cast giant shadows are the 42-year old Musk, the 40-year-old Larry Page from Google and the 29-year-old Zuckerberg. Jobs is sui generis, but Musk is a modern-day Henry-Ford-meets-Alva-Edison-and-Nicolai-Tesla. Page is our Einstein, and Zuckerberg is now our Alexander Graham Bell. All are among the all-time greatest inventors and thinkers of their centuries.

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