Internet Business News and Stories

At An Estimated $35 billion, Instagram Is Now Bigger Than Twitter.

Who could have thought that sharing photos could be a business worth billions? And who would have imagined that a seed of $1 billion could sow a tree worth $35 billion? Well, it is, and it has. To be clearer, Instagram has apparently fetched an enormous value of $35 billion, less than three years after Facebook bought it for a billion dollars.

Citigroup analyst Mark May had previously predicted the photo-sharing application’s valuation to be $19billion. Last week, however, Instagram revealed that it had reached a total of 300 million users, making the analyst reconsider the previous figure and raise it dramatically by over 84%.

The huge estimation has hushed the critics who were sceptical of Mark Zuckerberg’s decision to acquire the company in 2012.

That is not to deny that it seemed like a risky prospect back in 2012 when Instagram was only 30 million users strong. Facebook bought Instagram for twice its valuation at the time.

Today, this billion has earned the social networking giant 35 times more the amount.  Tech experts are going as far as to call it the best acquisition in the history of the Internet.

What’s also big news is that Instagram has 300 millions real users. This excludes any spammy accounts which were deleted by Instagram to prevent users appearing more popular than they actually are.

Along with the number of users, the analyst stated on Friday that the current valuation is based on Instagram’s potential to monetize its users. Considering that Facebook only recently introduced ads on Instagram, the photo-sharing service can be an even bigger earner for Facebook.

“While Instagram is still early in monetizing its audience and data assets and its financial contribution to FB is minimal today, we believe that it is quickly gaining monetization traction and would contribute more than $2bn in high margin revenue at current user and engagement levels if fully monetized,” May wrote in the report.

And it is only going to get bigger. May estimates that Instagram could have as many as 420 million users by the end of 2015. It has already become bigger than the microblog Twitter. May suggested that apart from the former having more users, its users are also 1.8 times more engaged than the latter.

Since its inception, Facebook has bought over 50 small and large Internet businesses, including Whatsapp, which it purchased at an astounding price of $19billion. While it is doubtful whether the instant messaging app could ever bring in 35 times the buying price, May wrote that both the acquisitions will start contributing significantly to the Facebook revenue from 2015.

Without a doubt, that’s a billion dollars well spent for Facebook. The major success story has managed to shadow other previous Internet acquisitions, including YouTube which was acquired by Google at $1.65 billion, Skype which was bought by Microsoft at $8.5 billion, and PayPal which was purchased by eBay at $2.2 billion.

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