Facebook has made headlines earlier today announcing it’s acquisition of photo sharing appInstagram for a whopping $1 billion dollars. The staggering purchase price becomes even more shocking if you’ve learned that Instragram virtually is not making any revenue and is only run by a dozen people (13 to be exact)
Facebook Buys Instagram For 1 Billion Dollars
Why would facebook spend $1 Billion dollar just before it goes public? There are a few angles to this..
Facebook is valued at $100 Billion dollars meaning that each user is worth about $118. On the other hand, Instagram has 36 Million users which makes a user worth $28 dollars but some of those users are already facebook users.
so why else would facebook buy Instagram? We think it’s preemptive attack on (or defense against) pinterest – the fastest growing social network in history. Pinterest is essentially a photo sharing social network based on interest. Instragram is a general photo social network, with some clever facebook integration, Zucckerburg could defend against Pinterst and add more value to facebook.
Some are saying that this acquisition is as clever as when Google acquired YouTube for $1.65 Billion, so it seems facebook is the real winner in the deal although the two founders of Instrgram netted $400 million and $100 million respectively as well as the 11 staff members who will share $100 million. Not a bad payout for 2 year worth of work.
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