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Is WhatsApp deal a reason to short Facebook?

Thursday, 20 Feb 2014 | 4:57 PM ET
'Shark Tank's' O'Leary: Facebook, WhatsApp deal shocking
Thursday, 20 Feb 2014 | 3:34 PM ET
"Shark Tank's" Kevin O'Leary raises concerns for Facebook's deal with WhatsApp for $16 billion. Mark Zuckerberg decided the stock is way overvalued, adds O'Leary.

Kevin O'Leary, star of the entrepreneur-based reality show "Shark Tank," has not hit like on Facebook's purchase of mobile messaging service WhatsApp.

Instead, the millionaire businessman told CNBC on Thursday that he thinks the deal is a mistake and is considering shorting the world's No. 1 social network.

The deal will cost Facebook a total of $19 billion, at 32 times revenue, and O'Leary is doubtful that it will be accretive for shareholders. He wonders whether Facebook could buy a similar messaging service for less, or simply develop and brand a comparable application on its own.

In short, O'Leary told "Closing Bell," he thinks Facebook may be overpaying in the extreme for WhatsApp.

(Read more: Why WhatsApp's $16B price tag makes sense)

Facebook's board should have raised the same concerns, but because the company has a dual voting class share structure, CEO Mark Zuckerberg can make these kinds of decisions on his own, O'Leary said.

"He is a fantastic CEO and has already created a lot of value, but that doesn't mean that every decision he makes is going to be a good one," he said. "There is nobody that can stop him from doing this because he has 57 percent of the votes.

(Poll: Facebook's buy of WhatsApp: Crazy, desperate money?)

"That really makes it [interesting] for people like me to say, 'maybe he'll get one of these wrong and I can make a lot of money shorting his stock,' " O'Leary said.

—By CNBC's Drew Sandholm. Follow him on Twitter @DrewSandholm.

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