Facebook wasn’t crazy to pick up Instagram, the photo-sharing service that could now be worth $35 billion, according to one Wall Street analyst.
“Citi’s Mark May issued a new valuation estimate for the popular app, far above the bank’s prior $19 billion valuation, a loftier view on the asset that May attributed to Instagram’s announcement last week that it had reached more than 300 million total users,” noted Fortune Magazine in a recent post.
“While Instagram is still early in monetizing its audience and data assets and its financial contribution to Facebook is minimal today, we believe that it is quickly gaining monetization traction and would contribute more than $2 billion in high-margin revenue at current user and engagement levels if fully monetized,” May explained in a recent research report.
The sky-high valuation makes Facebook’s 2012 acquisition of Instagram appear prescient, indeed. Especially considering the fact that the social media giant paid a mere $1 billion for Instagram.
“And Facebook’s move to make money off Instagram is just getting started,” the Fortune report reads. “Instagram began to roll out ads in its photo stream in late 2013, with video ads debuting on the platform roughly a year later. Citi’s May expects that 2015 will be the first year that Facebook begins to develop “more meaningful off-Facebook revenue streams,” and that includes efforts to make more money off Instagram.”
True, Instagram at $35 billion pales in comparison to Facebook with a current valuation of $220 billion. But still, the photo site is no small digital potatoes.