BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares surged as much as 9% after Facebook Inc (NASDAQ:FB) announced the $19 billion purchase of instant messaging service WhatsApp. Investors began speculating that BBM might also be worth much more than what Wall Street estimates. Before Facebook’s deal, some analysts valued BBM at $240 million. But based on the $42 per user that the social networking giant paid for WhatsApp, BBM should be worth a whopping $3.6 billion.

BBM vs. WhatsApp

Can BlackBerry Messenger fetch a WhatsApp-like valuation?

While WhatsApp has more than 450 million worldwide users, BBM is much smaller with just 85 million users. More than 1 million users are joining WhatsApp every day. In contrast, BBM gains only 2.8 million users per month, according to Bloomberg. If BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s messaging service continues to grow at the same rate, it is unlikely to reach WhatsApp’s current size of 450 million user base by 2025. Even if BBM’s growth rate doubles, that user base will be out of BBM’s reach until 2019. Moreover, Japanese online retailer Rakuten Inc. recently paid only $900 million for Viber, a similar messaging app with more users than BBM. That puts BBM’s valuation much lower than $3.6 billion.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is unlikely to find a buyer willing to shell out anywhere close to $3.6 billion for BBM because it doesn’t have the scale of WhatsApp. And the messaging company founded by Jan Koum is the market leader, so it could command a premium, which BBM can’t. The Canadian company hasn’t even started monetizing it yet. So, how is BlackBerry going to fetch the same valuation of $42 per user?

At the Mobile World Congress, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) CEO John Chen said that the company may eventually consider selling or spinning off BBM after it’s grown into a stronger competitor. Of course, the mobile messaging business has huge potential. Chen knows that until he can showcase that potential, nobody is going to pay $19 billion for BBM.

BBM has the chance to grow rapidly, if not at the pace of WhatsApp. It has a clear advantage in security. Facebook Inc (NASDAQ:FB)’s acquisition of WhatsApp may cause some security concerns among users, who may consider switching to a more secure option. Corey Sommers of Seeking Alpha says that the fears of mobile ads and security will be big concerns for older and business-savvy professionals.

Many WhatsApp users have security concerns

Recently, the German government warned its people to switch away from WhatsApp, citing security issues. A German official said that the issue goes far beyond how Facebook Inc (NASDAQ:FB) will treat the privacy of WhatsApp users. He said WhatsApp was found to have a major design flaw that allowed hackers to decrypt messages. German data protection commissioner Thilo Weichert said that the messaging company has never been clear about how it resolves such security issues.

BBM is not without security concerns. But users perceive it to be much safer than WhatsApp. A quick Google search for phrases “WhatsApp security” and “BBM Security” separately makes it clear. Googlers interested in WhatsApp security focused on “breaches”, “concerns” and “issues.” But those who wanted to know about BBM security focused on “features”, “Android” and “questions.”

BlackBerry WhatsApp

Blackberry BBM

BlackBerry’s app can command a higher price per user

That’s why John Chen is targeting lawyers, bankers, business executives and other professionals. Recently, he unveiled BBM Protected, an improved version of the messaging service that has enhanced encryption. The company also plans to introduce new features such as free calls and BBM Channel chat rooms to its instant messaging tool. Though it may not attract as many users as WhatsApp, the company will have an opportunity to charge its business users for using the service. WhatsApp offers one year of free service, and then charges $1 per year. Veritas Investment Research analyst Neeraj Monga says that BBM will be in a much better position to command a higher price per user as its business users are more valuable. And strong monetization can easily increase the value of BBM.