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Facebook’s WhatsApp deal and the search for a crash

When a company throws around $19-billion (U.S.) to acquire a start-up with limited revenues and just 55 employees – as Facebook Inc. did when it made a jaw-dropping deal for WhatsApp Inc. several days ago – skeptics see red: Surely, this is a sign that the stock market is overheating.

In some anecdotal ways, the WhatsApp deal does appear to push the limits of deal-making to the extremes. According to Bloomberg News, it marked the biggest deal for an Internet company in more than a decade. It also values a company with an unproven business model above more than half of the companies in the S&P 500, drawing comparisons to the dot-com bubble.