Facebook's latest acquisition makes sense
With Instagram, Facebook could easily eclipse its competitors in the photo-sharing space.
Instagram is a highly engaging service, with more than 30 million users on Apple's iOS mobile platform alone. It racked up more than 1 million downloads within a day of its launch on Android, and its strong growth continued after the acquisition was announced. Facebook competes primarily with Yahoo's (YHOO) Flickr and Google's (GOOG) Picasa in the online photo sharing space, along with scores of smaller players.
Instagram may turn out to be a great buy
Instagram saw some 5 million downloads for the Android platformin just six days, which makes it one of the biggest app launches ever. Android is the most popular smartphone platform, and Instagram's Android user base could become bigger than its sizable iOS user base with months at the current rate.
While there was a small outcry against Instagram getting acquired by Facebook, given the latter's limited history when it comes to big acquisitions, it didn't impact Instagram's popularity at all. Soon after the news broke out, Instagram also became the No. 1 free app on the iOS App Store for the first time ever. Facebook may also integrate Instagram with its platform in the coming days, which could further boost user numbers and engagement levels across the service.
Acquiring Instagram may actually turn out to be a wise move by Facebook. With the combined might of its own online photo sharing feature and Instagram's mobile photo sharing apps, Facebook could easily become bigger than any competitors in the photo sharing space.
We currently have a $82 billion valuation for Facebook based on discounted cash flow valuation of its advertising and virtual transactions businesses.
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