Facebook's latest acquisition makes sense

With Instagram, Facebook could easily eclipse its competitors in the photo-sharing space.

By Trefis Apr 12, 2012 5:52PM
Facebook recently acquired a very popular mobile photo sharing service, Instagram, for more than $1 billion to bolster its position in the rapidly growing mobile photo-sharing space. (See our note, Facebook snaps up Instagram to secure online pics leadership.)

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.

Facebook Stock Break-Up
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.

0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123
123 rated 1
266
266 rated 2
485
485 rated 3
660
660 rated 4
586
586 rated 5
652
652 rated 6
640
640 rated 7
504
504 rated 8
289
289 rated 9
159
159 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.