Buying Instagram is probably the smartest thing Facebook has ever done

What now?
What now?
Image: AP Photo/Jeff Chiu
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In 2012, Facebook bought the 13-person photo-sharing app Instagram. Six years later, it seems safe to say it was the company’s smartest purchase ever, with the app now estimated to be worth $100 billion.

It’s a staggering 100-fold return on the original $1 billion purchase, especially considering its next high-profile social media acquisition, WhatsApp, cost Facebook $19 billion in 2014. (The VR company Oculus also cost Facebook twice as much as Instagram.)

The new price tag comes from a Bloomberg Intelligence report shared with Quartz. Its author, analyst Jitendra Waral, also estimates that Instagram should reach 2 billion users—catching up to Facebook itself—in the next five years. Instagram recently announced it reached 1 billion monthly users.

Instagram, Waral writes, “should be able to double the traffic at a faster pace, as the adoption curve of the platform has outpaced core Facebook.”

The financial implications of the acquisition have been huge for Facebook, which has been able to easily replicate the News Feed ad model for the photo app. Its newest product, a broadcasting platform called Instagram TV, could boost the business as well, Waral adds.

Users are spending nearly as much time on Instagram as they are on Facebook. According to a recent report, that’s about 53 minutes per day for Android users. Market analysis firm eMarketer also recently estimated that Instagram now accounts for nearly 30% of Facebook’s net mobile ad revenue, with that share potentially growing to 40% by 2020.