In 2012, Facebook announced that it was buying Instagram for $1 billion. And since Facebook’s shares had declined by the time the deal closed, the actual value of the purchase was less than $1 billion. At that time it looked like Mark Zuckerberg had overpaid for the picture and video sharing site. Instagram wasn’t even being monetized and no one was sure how Facebook was going to make its money back.
Well, here we are in 2014. Instagram is extremely popular. Recently, it was announced that it had 300 million active users. Also Instagram tops the 284 million active Twitter subscribers. It also now runs ads. Yes, I would say that Facebook’s purchase of the site was a good idea at the time.
The real question is, what is Instagram worth today? A previous calculation by Citigroup valued the site at $19 billion. And now Citigroup believes that if Facebook can fully monetize Instagram, Instagram could bring $2 billion a year into Facebook’s pocket. And so, Citigroup currently places a value of $35 billion on Instagram. Not bad at all. It looks like Facebook has made a very wise investment. Hopefully it will continue to surge upward and not go down in value. Facebook has been doing all of the right things so far.
Source Phone Arena