Six years ago, Facebook took a huge risk when it bought photo-sharing app Instagram for $1 billion. When Facebook was about to make an initial public offering, many speculated the purchase was probably a bad business move. However, it turns out, the forward thinkers at the world’s most popular social networking site had made a brilliant acquisition.
Bloomberg Intelligence, which provides in-depth research and financial analysis of companies, industries, and governments, estimates Instagram would be worth $100 billion today if it had remained independent. Just this month, Instagram reached 1 billion users. With this many active accounts, Instagram revenue is predicted to exceed $10 billion by this time next year.
Bloomberg News reports the photo-sharing app attracts users at a faster rate than its parent company Facebook. By 2023, Bloomberg Intelligence analyst Jitendra Waral projects Instagram will have 2 billion users. While Facebook has more than 2 billion accounts now, Waral says Instagram will double its 1 billion users at a much faster pace.
In general, users of Instagram are younger than Facebook users, which makes the image app very appealing to advertisers. A 2018 Pew Research report, cited by BGR, revealed Facebook’s popularity among teens was lower than YouTube, Instagram, and Snapchat. In addition, Instagram continues to build subscribers while Facebook accounts have been slowly dwindling, especially in the United States.
Over the next 12 months, Instagram is expected to generate about 16 percent of Facebook’s revenue. Last year, the app accounted for just a little under 11 percent.
Recent data provided by Recode revealed Instagram users spend almost as much time on the app as the Facebook app. Compared to 58 minutes per day on Facebook, 53 minutes per day is spent on Instagram by the average user. Snapchat fell just short of that at 49.5 minutes.
While Instagram is probably the most popular photo-sharing app at the moment, it isn’t stopping with just pictures. Instagram television, otherwise known as IGTV, was introduced last week. The new service will let users share long videos, possibly up to an hour, on their account.
With users of the main site falling off and trust in social media dropping, Facebook shareholders are surely happy Instagram turned out to be such a significant windfall. Instagram, which had only 13 employees when it was purchased in 2012, has experienced explosive growth in the past few years and given Facebook a 10-fold return on investment.