WhatsApp is not really free but supposedly cost $1/year from the second year. Yes they are doing free renewals for now and i am guessing it will not be long they begin to charge again.
They have 400 million active users now and will be around billion users by next year. If they charge the usual $1/yr in the emerging markets and say $5/yr in the developed markets that will get them around $3 billion revenue. Also they have almost 90% gross margins as from what i read its a tight operation with just 50 people and 600 servers.
So with a $2.7 billion EBITDA by 2016 the $19 billion dollar valuation is just 7x multiple and very reasonable. This is not even considering the strategic value of WhatsApp to Facebook!.