Facebook Agrees to Buy Instagram Photo App for $1 Billion

Kools's picture
Rank: Senior Baboon | banana points 223

From Bloomberg:

Facebook Inc. (FB), the world's biggest social-networking service, agreed to buy the Instagram mobile photo-sharing application for about $1 billion in cash and stock, its biggest acquisition yet.

The transaction is expected to close later this quarter, Menlo Park, California-based Facebook said today in a statement on its site. The company plans to let Instagram remain independent from Facebook.

http://www.bloomberg.com/news/2012-04-09/facebook-...
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Comments (13)

Apr 9, 2012

How is instigram worth thaat much?!!

I doubt they had earnings of even $10MM, giving the $1B purchase a multiple of nearly 100x...

Am i crazy or is facebook?

Apr 9, 2012
USCstudent26:

How is instigram worth thaat much?!!

I doubt they had earnings of even $10MM, giving the $1B purchase a multiple of nearly 100x...

Am i crazy or is facebook?

That does seem nuts, but like with most tech acquisitions and IPOs, these companies seem to be heavily overvalued and everyone is willing to pay a premium for the perceived future cash flows of tech start-ups. Wish I was bold enough to start one of these suckers. Instagram? Really? Who woulda thunk it?

Apr 9, 2012
USCstudent26:

How is instigram worth thaat much?!!

I doubt they had earnings of even $10MM, giving the $1B purchase a multiple of nearly 100x...

Am i crazy or is facebook?

Instagram doesn't even have earnings. They probably don't even have EBIT, just like Yelp. But Yelp is valued at $1.5B so maybe FB was like... hmmm... instagram is a little bit less. Let's go with $1B.

Apr 9, 2012

Btw which banks were involved??

Apr 9, 2012

^ THIS is the question that needs answers

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Apr 9, 2012

This is a very smart buy on FB's part. FB was built around its most engaging feature, sharing and looking at photos, which is does better than any other traditional website accessed from a computer. FB sucked though at doing this via mobile, its simply too slow. Instagram is the dominate mobile photosharing platform. Think about it, without photos are you really going to use facebook? Mobile is the future, and FB has no future in social networking if its not the dominate mobile social network. Instagram has 30mm users as of last report, with FB Ad sales team already in place it should be a cake walk to monetize that. Overall $1bn is a steal for FB.

Apr 9, 2012

Does anyone else find the effects on Instagram photos annoying? I mean, seriously, we quit using 110 cameras for a reason.

Apr 9, 2012
Edmundo Braverman:

Does anyone else find the effects on Instagram photos annoying? I mean, seriously, we quit using 110 cameras for a reason.

Tell that to the incredibly large market of hipsters who love using Instagram for that retro effect it gives picture. It's a load of crap, but people will pay for anything to fit in.

Apr 9, 2012

For a company that prides itself on innovation and taking a step forward, going out and buying a company that prides itself on making a product giving the appearance of a step backward is the NKI...

Meanwhile, century-old Kodak goes bankrupt.

Apr 10, 2012

Instagram founder: "I just sold an app to Facebook for a billion dollars."

Polaroid founder: "Really what does it do, solve world hunger? Cure cancer? Result in world peace?"

Instagram founder: "No. It takes high quality digital photos and makes it look like they were taken by a shitty Polaroid."

Polaroid founder: "Son of a @#$%."

Apr 10, 2012
freeweezy123:

Instagram founder: "I just sold an app to Facebook for a billion dollars."

Polaroid founder: "Really what does it do, solve world hunger? Cure cancer? Result in world peace?"

Instagram founder: "No. It takes high quality digital photos and makes it look like they were taken by a shitty Polaroid."

Polaroid founder: "Son of a @#$%."

Instagram founder: I do have some Polaroid cameras in the attic. Might sell them in the museum in 10 years to make a couple of thousand dollars more.

Apr 10, 2012

Instagram is pretty cool in my book. It's also the quickest way to upload a picture online. You can take a pic and 10 seconds later it is on facebook, twitter, instagram and whatever other sites you may use. The effects are decent enough.

Personally, trying to project it's future cash flows would be pretty difficult in my book as I don't even know how they generate revenue now so $1B could be a bargain or insanely overvalued.

My name is Nicky, but you can call me Dre.

Apr 9, 2012