A Smart Facebook Move or Acquisition Folly
There are many left scratching their heads when Facebook plopped down $1 Billion in its acquisition of Instagram in April of this year. What surprised many was the price tag for a relatively small company with only 13 employees and no revenues. The acquisition of the decade? Certainly the most expensive.
Zuckerburg is currently explaining this move while he is touring on the investor’s roadshow for Facebook’s upcoming IPO. Apparently, Instagram hit some sort of magical tipping point and it was expected it would achieve a significant growth spurt. And there were other suitors. Twitter was rumored to also be interested in adding Instagram to its portfolio, but probably not at the final price tag.
Looking at the Instagram Infographic below from KISSmetrics, one would have to agree that this red hot little gem has achieved explosive growth over the last two years. Nonetheless, $1 billion could buy a whole lot of cameras.
Facebook has promised Instagram users that it would be business as usual there will not be any major disruptions as a result of the acquisition. Facebook apparently wants to grow Instagram as well as incorporating some of its features into Facebook.
Time will tell if this was a genius acquisition or a very expensive mistake.
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Source: Instagram By The Numbers – Infographic