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Instagram Valuations for the Social Media Crowd










By Kyle Stock of The Daily

Is Instagram, a mobile photo-sharing app without a business model, worth $1 billion?Sure, why not?

Facebook’s bid for the burgeoning firm, often described as a visual version of Twitter, is right in line with the amounts that investors are paying for so-called eyeballs in today’s frothy tech market.


With roughly 30 million users, Instagram would be getting $33 for every person who has downloaded its app. In comparison, Zynga, the social-gaming startup that held its IPO in December, has a market value of about $36 per user.
Meanwhile, if Facebook goes public at its expected worth of $100 billion, shareholders will be spending more than $100 for each person using the platform.
Of course, Facebook is buying much more than a fixed set of users. Instagram gives it a solid beachhead in the mobile market, terrain where it has struggled.
And Mark Zuckerberg’s merger and acquisition advisers likely considered Instagram’s growth potential to be as much or more than its current size. The firm has won over a respectable 1.6 million users a month on average. That pales in comparison with Facebook, which has been on a pace of about 9 million a month.
However, Instagram is outstripping LinkedIn, which has added about 1.4 million members a month.
LinkedIn, however, has something Instagram doesn’t: revenue. Instagram remains free and ad-free. The company is still in the land-grab stage, like Pinterest, another hot social-media startup without a fully built money-making mechanism.



Instagram Valuations for the Social Media Crowd Reviewed by Anonymous on Wednesday, April 11, 2012 Rating: 5
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