Why did Facebook Pay a billion dollars for its Instagram Acquisition ?

Facebook recently acquired Instagram and at a whopping 1 billion USD.


Why did Facebook Pay a billion dollars for its Instagram Acquisition ?

Why do u think Instagram was worth 1 billion US$ ? Or wasnt it?

Would love to hear your thoughts on it.

I would like to call this acquisition more of a fear than power. If we go through the media reports i found one of the lines very interesting "At 27 million registered users on iOS alone, Instagram was increasingly positioning itself as a social network in its own right %u2014 not just a photo-sharing app. And it was clear that some users were doing more of the daily sharing actvities on Instagram rather than Facebook%u2019s all-in-one mobile apps, which had to be cluttered with nearly every feature of the desktop site" Till now noone of the social network sites have come close to competing with FB. Another point we can make out is that the money FB was making and will now receive after going public had to be spent for expansion. This was the right strategy but only time will tell.

Business Insider has come up with a very interesting case Instagram billion dollar valuation - Business Insider

The author says 1 billion may be an undervalued amount for the startup with 13 employees.

Facebook had registered last years profit as 1 billion dollars. Purchasing a company for such an amount which was created only with 13 employees may not be the smartest decision.

Are we saying if facebook spent 1 billion $ on creating a new app and marketing it like instagram then it wouldnt be much more successful?

Something is fishy about this deal

Facebook has filed for an IPO recently. They have soo much money and nothing better to do with their own product, so they are acquiring other popular products.

I use twitter and I hate that facebook acquired instagram. Just hope they dont spoil it like they spoilt facebook experience.

I think it was a very smart decision by Facebook. Instagram has loyalists. The users adore the tool and platform. Now it all depends on how Facebook leverages Instagram's reach and tool.

Originally Posted by ankitagaba

I think it was a very smart decision by Facebook. Instagram has loyalists. The users adore the tool and platform. Now it all depends on how Facebook leverages Instagram's reach and tool.

Absolutely. I read that facebook's key feature is photo sharing and facebook has low mobile penetration and low revenues from mobile.

Instagram was a threat as a competitor to facebook and this acquisition is initially to evade that threat.

Unlike how google ignored facebook when orkut was dominant, Mark did not want to repeat this mistake.

FB failed to develope similar project and they dont have good mobile integration. Good move.