Facebook acquired Instagram in April 2012. Since then, Instagram has grown by over 23 percent while Facebook struggled at just over three percent. According to Forbes, Facebook spent $1 billion for the creative photo services of Instagram. Instagram currently has over 300 million users, and Citigroup estimates its worth to be around $35 billion now. Mark May, Citigroup’s Analyst believes that this surge is only in its initial stage, at the moment. The evaluated amount is a result of a thorough analysis and forecast that Instagram is going to have 420 million active users by the end of 2015. That forecast may appear optimistic, but this still is just 65 percent of the monetization rate estimated for Twitter. There is an estimation of $2.7 billion revenue for Instagram next year. Instagram is evidently growing much quicker than Facebook.
Mark Zuckerberg may have made the best business decision for Facebook by acquiring the photo sharing app in the spring of 2012 even though it may have looked like a risk at the time when Instagram had only 30 million users. The move is now starting to look like a bargain. According to analysts, Facebook currently stands at $221 billion market share, and Instagram alone accounts for 16 percent of the total value. Streetwise reported that Citigroup’s analysis led tech investor, Eric Jackson, to comment that Zuckerberg’s decision to acquire Instagram may easily be the best internet acquisition ever. Facebook is growing at a rapid rate, with Instagram catering its services to a much wider audience than Twitter. Instagram is, however, beating its parent company in individual growth rate.
A Forrester study revealed that Instagrams’s success is due to the face that the users share over 70 million photos and videos every day that are more engaged than the audience on Facebook and Twitter. The statistics of the rate of engagement of users are as follows: Instagram showed more engagement per follower by 120 times than Twitter, and more engagement per follower by 58 times than Facebook. According to The Street, if Facebook boosted its advertising capacity to full potential, Instagram would fetch $2 billion high-margin revenue to the social networking site.
Facebook shares were traded up at 1.5 percent at $79.56 last week because of the study and calculated predictions made by top Analysts. Twitter shares were traded at around $36.72 the same day, The Street reported. The forecasts and valuations for Instagram is partly based on using Twitter as a proxy. Apart from being larger, Instagram users were more engaged and the number of users have been increasing staggeringly. It is believed that the gap between the number of Twitter users and Instagram users will continue to widen. Facebook may have got the deal of the decade by buying the photo-sharing service. Instagram continues to grow much faster than Facebook itself.
By Anila M.