Billion With A B: The Story of Instagram Stock

People thought they were crazy. In April 2012, Facebook purchased Instagram for $1 billion. But since then, Facebook and, thus, Instagram’s stock prices have been on the rise.

No one’s laughing now.

With frequent developments and new releases, we don’t think Instagram’s company growth shows any signs of slowing down.

In this post, we’re breaking down everything you’d ever want to know about Instagram stock.

Why Facebook Shelled Out For Instagram Stock

Wait, did you not know Facebook owns Instagram?

Don’t worry. You’re not the only one.

We’ve met lots of people who had no idea social media giant Facebook is behind Instagram.

Here’s what happened.

In the months leading up to Facebook’s acquisition of Instagram, its users were uploading 250 million photos per day.

Photo sharing was (and still is) clearly the future.

Facebook recognized Instagram’s potential and wanted to capitalize on the app’s advertising opportunities.

On their own platform, advertising was reaching a saturation point.

You know what else was reaching a saturation point?

Moms on Facebook.

With their eye on a more youthful demographic of users, Facebook wanted Instagram in order to strengthen ties with its younger audience. The 18-29 age group had started to drift away from Facebook.

We think Facebook definitely made the right move.

Some analysts believe Instagram’s number of active users could eventually surpass Facebook’s.

That deserves a double tap.

How Instagram and Facebook Killed Snapchat

For years, Instagram and Snapchat battled for the top spot as the most popular social media app among younger users.

In fact, Facebook CEO Mark Zuckerberg reportedly wanted to buy Snapchat. At that time, approximately one in four Americans aged 18-29 were active on Snapchat.

While the two apps undeniably have a lot in common, Instagram is the superior platform for branding, advertisement and engagement.

In August 2016, Instagram Stories debuted—a move which really drove the stake into Snapchat’s heart.

Instagram Stories allow users to share a collection of photos and short videos that disappear automatically after 24 hours.

Hmmmm. Sounds a lot like Snapchat, right?

Learn how Instagram stock killed Snapchat!
Image Credit: Christian Wiediger on Unsplash

Users who were active on both apps no longer needed to switch platforms. After the debut, Instagram saw a major increase in users and engagement levels.

According to Instagram, its Stories feature has surpassed more than 400 million daily active users.

Snapchat, on the other hand, has seen a decline in its daily active users and reported just 191 million of them.

At the end of the day, Facebook and Instagram have been able to monetize what Snapchat couldn’t.

While Snapchat isn’t completely gone yet, we think its only a matter of time. When it comes to user numbers and data, Snapchat just can’t compete with Facebook and Instagram.

Find out how you can use Instagram Stories to build your brand. We’re sharing our secrets for how to get the most out of Stories.

A Brief History Of The Instagram Stock

It’s been eight years since Facebook bought Instagram. Let’s take a look at what’s changed.

Instagram Stock Then: 2012

In 2011, analysts valued Instagram at around $20 million.

Then, less than two years after the first photo was posted on Instagram, Zuckerberg gave the go-ahead and Facebook purchased Instagram for $1 billion in April 2012.

That’s billion with a “b.”

The deal cost Facebook about a quarter of the company’s cash-on-hand.

To be exact, Facebook paid $300 million in cash and 23 million shares of stock.

People compared it to Yahoo’s acquisition of Flickr in 2005, but in our opinion, the deals couldn’t be more different.

When Facebook bought it, Instagram had an estimated 30 million iPhone-users. It had recently been released for Android phones and was reportedly downloaded 1 million times the first day.

Always looking for the next best thing, Zuckerberg saw a company with untapped revenue streams and knew he had to have it.

From the start, Facebook planned to keep Instagram independently managed. Co-founder Kevin Systrom is still at the helm as CEO.

In the years since, Facebook and Instagram have revolutionized the photo-sharing app’s business model.

Zuckerberg gave us *gasp* the algorithm. Learn about the factors affecting the Instagram algorithm, and check out our tips for how to beat it.

Instagram Stock Now: 2018

A lot has changed since Facebook and Instagram joined forces.

In June 2018, Instagram announced it had surpassed 1 billion monthly active users.

The Instagram company growth is mind blowing!

Our fave photo-sharing app is racing toward Facebook’s 2.2 billion monthly active users.

Catching Facebook is a real possibility.

Instagram’s growth is expected to continue accelerating while Facebook’s user growth is slowing down.

Over the last eight years, Facebook has made increasing Instagram’s advertiser base a priority.

This year, Instagram could account for 28 percent of Facebook’s mobile ad revenue.

That’s $5.5 billion from Instagram alone.

By 2020, some researchers believe it could account for as much as 40 percent of mobile ad revenue.

If it were still a stand-alone company, Bloomberg Intelligence Analyst Jitendra Waral estimates Instagram would be worth $100 billion.

And, who were the haters calling Facebook crazy?

Everything you need to know about Instagram stock. Person starting Instagram live.
Image Credit: Hans Vivek on Unsplash

The Future Of The Instagram Stock

Alright, Zuckerberg, color us impressed.

And, as if everything Facebook and Instagram have done together so far wasn’t enough, the best is most likely still to come.

According to some analysts, investors may not yet fully appreciate the earning potential Instagram could have for Facebook.

Like we mentioned earlier, by 2020, Instagram could be Facebook’s front-runner.

By 2020, Instagram could have as many as 1.4 billion monthly active users.

That’s potentially $22 billion in revenue, according to analysts from KeyBanc Capital Markets.

Those predictions may help to reassure anyone worried about Facebook’s slowing growth.

As the parent company, Facebook will reap the financial benefits of Instagram’s success.

You’re looking at the next generation of Facebook.

How Instagram Stock Continues To Grow

It doesn’t appear that Facebook and Instagram have taken any time to pat themselves on the back.

The newness just keeps on coming.

In June 2018, perhaps to celebrate 1 billion monthly active users, Instagram announced IGTV.

IGTV is a new feature for watching vertical videos up to an hour long. The stand-alone app is also available withing the Instagram app.

While the Instagram Stories feature seemed to be a direct challenge to Snapchat, IGTV looks to take on YouTube.

For now, there are no advertisements on IGTV, but knowing Facebook, they’re coming.

But, Instagram CEO Kevin Systrom said, if and when IGTV offers advertising, there will be a revenue-sharing deal with creators.

A deal with Instagram could earn IGTV creators a pretty penny.

This year, digital video ad spending in the U.S. is predicted to rake in $7.9 billion, according to eMarketer.

The announcement bumped Facebook’s stock price to $202.

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From our CEO @kevin: “Today, we have two big announcements to share. First, Instagram is now a global community of one billion! Since our launch in 2010, we’ve watched with amazement as the community has flourished and grown. This is a major accomplishment — so from all of us at Instagram, thank you! Second, we’re announcing our most exciting feature to date: IGTV, a new app for watching long-form, vertical video from your favorite Instagram creators, like LaurDIY (@laurdiy) posting her newest project or King Bach (@kingbach) sharing his latest comedy skit. While there’s a stand-alone IGTV app, you’ll also be able to watch from within the Instagram app so the entire community of one billion can use it from the very start. IGTV is different in a few ways. First, it’s built for how you actually use your phone, so videos are full screen and vertical. Also, unlike on Instagram, videos aren’t limited to one minute. Instead, each video can be up to an hour long. We made it simple, too. Just like turning on the TV, IGTV starts playing as soon as you open the app. You don’t have to search to start watching content from people you already follow on Instagram and others you might like based on your interests. You can swipe up to discover more — switch between “For You,” “Following,” “Popular” and “Continue Watching.” You can also like, comment and send videos to friends in Direct. Also like TV, IGTV has channels. But, in IGTV, the creators are the channels. When you follow a creator on Instagram, their IGTV channel will show up for you to watch. Anyone can be a creator — you can upload your own IGTV videos in the app or on the web to start your own channel. Instagram has always been a place to connect with the people who inspire, educate and entertain you every day. With your help, IGTV begins a new chapter of video on Instagram. We hope it brings you closer to the people and things you love. IGTV will be rolling out globally over the next few weeks on iOS and Android.

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Want to learn more about IGTV? Check out our detailed guide with everything you need to know about Instagram’s newest feature.

IGTV isn’t the only new feature that has Instagram users excited.

Recently, Instagram announced a new feature for Stories which allows users to include music with their photos and videos.

It goes to show how much Instagram and Facebook value their users. We can only imagine how much the music licensing deals ran them.

But, the price is certainly a small one to pay compared to how much Instagram and Facebook stand to earn from their happy users in the years to come.

Beyond Instagram Stock

That might have been a lot of data to throw at you, but we knew you could handle it.

Bottom line: Instagram is going places, and we don’t want you to miss out.

Upleap provides dedicated account managers who will grow your Instagram with organic followers.

While you wrap your head around all these statistics, let us help you connect with followers who will love your account.

Don’t wait. Check out our no-commitment free trial today!

By Alex

When she's not writing about the Gram, you can find Alex curled up with a book, reaching for another taco or watching anything (okay, everything) starring Winona Ryder. An avid traveler, she regularly posts photos of her life abroad in Mexico. If Alex could switch Instagram accounts with one celebrity, it would *hands down* be Chrissy Teigen.

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