Share:

Instagram Deal With Facebook Finally Closes And 5B Photos Shared Announced

Share:

Facebook has announced today that they’ve finally completed the acquisition of the photo-sharing network Instagram. The deal was formed on April 12th, 2012 for $300 million cash and 23 million shares of stock.

Facebook is committed in supporting the network’s growth and notes “Instagram isn’t going anywhere.” Here is more from the Facebook Newsroom:

As we said from the beginning, we are committed to building and growing Instagram independently. Instagram will continue to serve its community, and we will help Instagram continue to grow by using Facebook’s strong engineering team and infrastructure. We also can’t wait to work with the talented Instagram team to improve the mobile experience.

We’re looking forward to an exciting future with the Instagram team and to all of the great new experiences we’re going to be able to build together.

If you’re a smartphone owner, chances are you’ve taken a few shots with Instagram. Since the release of the application in October of 2011 more than 5 billion photos have been shot and uploaded. Call me crazy, but I have never been a huge ‘Instagramer.’ I prefer using my Cannon t2i and editing them in Adobe Photoshop on my own.

When word came out that the Instagram deal was worth $1 billion, there was a mix of reactions. I personally was astonished because I knew Instagram’s potential value was much higher. Since the deal, Facebook stock value has dropped; the deal now has an estimated worth of $736.5 million. What are your thoughts on the deal?

Share:

  • Instagram’s potential value is much HIGHER? Where is the value in a company that has no revenue stream and must be paying out millions a year in image hosting? I don’t get it.

    I can’t believe Facebook sees as much value in it as they do. How are they planning on making all of that money back from this acquisition?

  • I think Facebook is banking on the userbase of Instagram. It’s growing like a weed. As for a revenue stream…who needs that nowadays in web 3.0?? lol

  • RyanStOnge

    Obviously our opinions are different. Instagram doesn’t make money currently but it shouldn’t be long before they add a revenue stream. Like Gary said, the user base is huge.

  • Yes, but why does a company with a userbase of 800 million need a company with only 5% of that, most of whom likely overlap with their own users?They’d stand to gain maybe 5 million users that they don’t already have, and many of those who aren’t current Facebook users are considering abandoning Instagram after hearing of the merger.

    Whether or not it’s a trend, I still think it’s a bad business decision to spend 700 million dollars on a company that costs a fortune to operate, but has never in fact made any money, at least as far as I can tell. Keep in mind that for the price they paid, they’ll need to figure out a way to get $20 from every Instagram user… and that’s just to break even!

  • It looks like the Instagram acquisition was a move to prevent it from falling into the hands of its competitor, Google.

    But I totally agree with you. Instagram doesn’t make any money at all. Buffet was right, don’t invest money into something you don’t understand.

  • Just found this article: http://allinstagram.com/2012/08/30/kevin-systrom-talks-instagram-financials-at-regulatory-hearing/

    To date, Instagram is 2.7 million dollars in the hole. As their userbase grows, so does their operating costs. But that’s all that grows, as there’s no monetization happening yet. They just get the pleasure of spending more and more money as they become more popular.

    I’m curious to hear of a monetization model they can implement that makes them over $20 per user without pushing any of those users away. After all, you’re dealing with people who are used to having things for free. Many of them will drop off once there’s a cost involved.

    While the idea of keeping it away from Google makes sense on the level of high school popularity contests, when you work out the finances, it doesn’t make any logical business sense to me.

    Sorry, hopefully this doesn’t sound like I’m hating on you guys, I’m more just trying to understand why Zuckerberg would make such a decision, and no argument I’ve heard yet makes any sense to me.

  • I like that our opinions are different, it makes for good discussion. Hopefully I’m not coming off as too hostile.

    I’m really just trying to see a way that it makes sense. It drives me nuts that that much money is being thrown around and no one can figure out how they’re planning to make it back.

  • Of course no offense taken, this is real talk. Instagram has no business model yet is “worth” a billion dollars on paper. Does not make sense.

Deals