What surprised me about the Instagram acquisition by Facebook was not the transaction itself, but the price.
1 billion US$?
Not 811 million US$, not 769 Million US$ but a clean 1 Billion US$.
And this is for a Company with a few million users, zero revenue etc etc. So there was/is no real 'basis' for this number, right?
Now, I'm thinking, Facebook declared a clean 1.0000 Billion US$ profit in its last financial year as also stated in its IPO filing document to the SEC:
See this image taken from the SEC filing:
This is a better illustration of the same numbers from TechCrunch
So, was there a meeting of minds between Facebook and Instagram when it came to the magical number of 1 BILLION US$?
- I mean, you go to a party, meet some creepy, long haired bloke who tells you in a South Indian accent, "Yeah, FB bought my Company for 349 milion US$", then all you will remember the next day after your hangover is hungover, is "a few hundred million dollars" and a south Indian accent.
BUT YOU AIN'T GONNA FORGET A BILLION (Say Bi - li - un ) Dollars.
- If I were the Instagram guy negotiating and read the Facebook SEC filing and figured that ZUCKY BABA gets turned on by 1 BILLION DOLLARS - then I would use the same number on him to make him realize that we share the same FETISH?!
He will like me, won't he, if we have the same 1 BILLION DOLLAR fetish?
Forget 'liking' me (pun intended), I'm saying - he will buy me!
- Lesson and Take out:
Strange are the stories of the Internet world. Even the Gods don't know sometimes!
So, just put your head down, and make the next Instagram happen!
I think it has more to do with the Lens and the Four colors.
Incidently I also started using Instagram 2 days ago.
Reminds me of same hulla bulla hype when facebook was pretty raw and microsoft acquired stake in it with search integration rights for bing.
Look at the roi for microsoft today and the money they paid for investing in fb looks peanuts !
Worth having a look at this quora thread - http://www.quora.com/Facebook-Instagram-Acquisition-April-2012/What...
One very interesting aspect that I came across on Forbes could also be:
Instagram has around 30 million users, at a $1 Billion buyout, each Instagram user is being acruired by facebook for around $ 33.33.
Facebook on the other hand has 850 million users and is supposed to be trading with a market cap of close to $100 billion , giving it a value of $117 per user.
So they managed to acquire these (passionate, mobile hugging, active) Instagram users rather cheap (in my personal opinion).
But then, we still don't know what the cash-stake ratio was (which could throw this calculation out of gear)
Frobes did a very lame analysis where they assume that entire 30 million Instagram users are not Facebook users. On the other hand, almost all Instagram users are either on Facebook or Twitter. A more detailed analysis can be found here
99% of the Instagram users already use Facebook - so they paid big bucks to get their existing user base...
I believe this is yet another User Growth Campaign for Facebook. See the detailed analysis here http://www.abhishekbharadwaj.com/2012/04/the-anatomy-of-facebook-in...
Read through your analyses and relevant, however, there is a slight miscalculation on your end.
Is it a good deal?
Facebook spent 1 Billion $ for getting 10 Million Active users or has actually paid 10$/user. Now ...
$1 Bn for 10 Mn Active Users equates to $100 / user.
thanks for pointing out...
I am assuming you mean SEC filing. If thats what you are looking for, here goes www.scribd.com/doc/80167758