Facebook has acquired US-based mobile commerce start-up Karma for an undisclosed sum, after raising $US16 billion from its much-anticipated IPO, valuing the company at $US104 billion.
Facebook’s IPO sparked huge interest from investors on its opening day last week, but failed to generate much of a profit.
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The stock closed at $38.23 in Nasdaq trading, up just 23 cents from its initial price, when many analysts had expected a jump of 5% to 10%.
Nevertheless, the IPO gave Facebook a value of $US104 billion, with the social media giant raising $US16 billion from the share offering.
Fresh off its first day on the Nasdaq, Facebook acquired one-year-old San Francisco start-up Karma, which allows users to send gifts to their friends from their smartphones.
While the terms of the deal are undisclosed, 16 Karma employees will be joining Facebook, although the Karma service will continue to operate.
The acquisition will help Facebook build up monetisation on mobile platforms.
“We’ve been really impressed with the Karma team and all they accomplished in such a short time,” Facebook said in a statement.
“This acquisition combines Karma’s passion and innovative mobile app with Facebook’s platform to help people connect and share in new and meaningful ways.”
Founded by Lee Linden and Ben Lewis, the Karma app allows users to browse through a virtual storefront. Karma has partnered with providers such as Spotify, so the gift range is impressive.
Once the user has found a gift, they can create a virtual card and send the gift to the recipient via text, email or a message on their Facebook wall.
Once the recipient has chosen to accept the gift, they provide Karma with a shipping address. Alternatively, the recipient can trade the gift for something else in the Karma store.
The app’s Facebook integration is a key part of its appeal. Karma reads through messages on users’ Facebook walls and alerts them to specific events where they might want to send a gift.
In a company blog post, Linden and Lewis said they were “thrilled” Karma has been acquired by Facebook.
“We founded Karma with the goal of adding the sentiment and meaning back into gift giving. That’s what Karma is all about. That’s what the Karma team set out to achieve,” they wrote.
“Over the last year, we’ve built a new eCommerce platform from the ground up. We’ve been honoured to partner with amazing brands to create a curated catalogue of products.”
“We made those products instantly giftable in a brand new way. And we harnessed the power of Facebook’s social network to ensure you never miss a chance to show someone you care.”
“The phenomenal response and feedback we’ve heard from customers has more than exceeded our expectations. And we’re just getting started — today we take social gifting to the next level.”
Linden and Lewis said the Karma service will continue to operate “in full force”, insisting “only goods things will follow”.
“Simply put, together we can celebrate life’s important moments in ways we could not before,” they said.