Is Instagram worth $33 billion? The Facebook-owned photo-sharing app is reportedly worth billions as calculated by research firm Cowen. Based on the latest report, the users of the said app are foreseen to increase more than double in five years.
The report on Instagram's $33 billion worth came after Cowen predicted the number of Instagram users will boost to up to 680 million by 2020 after crossing the 300 million market at the end of 2014, which eclipsed Twitter, USA Today Money revealed. So, was Instagram really the best Internet acquisition of Facebook?
The previous forecast of Instagram's value at $35 billion by Citigroup last December had inspired tech investor Eric Jackson to contend that Mark Zuckerberg's decision to pay $1 billion for the app three years ago might have been "the best Internet acquisition ever."
As of mid-Thursday afternoon, the stock price of social media site, Facebook, was up to 3.5 percent to $79.39. According to DCInno, the shares will be approaching their 52-week high of $82.17. Facebook's stock price upsurge stemmed after Cowen Group analyst John Blackledge gave an estimated valuation of $33 billion to Instagram, which was not too far from the valuation helmed by a Citigroup analyst two months ago.
"Instagram is rising social star and a valuable asset for Facebook given its large, fast-growing and highly engaged user base that's drawing significant advertiser interest per our recent social user and ad buyer surveys," Blackledge stated, as quoted by StreetInsider.
Blackledge also highlighted Facebook's fast-growing Instagram service and saw an upside based on a sum-of-the-parts valuation. However, when Instagram's $33 billion enterprise value is added to the company's other assets, it will make the stock cheap.
In 2012, Facebook paid about $715 million in cash for Instagram, which seemed to be quite a bargain as start-ups gain billions in valuations. For instance, privately held messaging service Snapchat is eyeing a $19 billion valuation while Facebook paid $22 billion for WhatsApp.
In 2020, Cowen analysts believe that Facebook will generate $5.8 billion in revenue, which is significantly greater compared to the $700 million this 2015. TheStreet.com cited the firm reiterated their "outperform" rating and a $91 FB share price target.
Cowen valued Instagram at $33 billion, which could be a very attractive investment opportunity for many. It also saw an upside potential on Facebook shares ranging from 23 to 36 percent.
© 2017 Jobs & Hire All rights reserved. Do not reproduce without permission.
