April 11, 2012
Vijaya Prasad

1 comment

The Billion Dollar Bargain

If I had a billion dollars lying around, I might also think that buying Instagram is a genius move. I’ll leave analyzing whether it was a desperate move as far as the company’s value vs what was paid to those who…were more successful in economics classes than I was. But then again, if econ were my thing I’d be writing a post on the effect of mergers and acquisitions of social networks on global markets. Or maybe not.

Here’s what I do know. Facebook is looking to grow, they know they’ve changed the social media landscape in a  big way (how would you even define social media  in  a non Facebook world)? In six days of being released on Android, Instagram had been downloaded 5 million times. That’s in addition to the 30 million iPhone users. Here’s  a really cool Infographic from mashable: from Zero to $1 billion in 17 months.

Here’s a great chart (from Statista) that shows you the cost per user (which if my econ classes serve me right) go down as the number of users go up (I can just see the green and pink supply and demand lines being drawn somewhere). According to Statista,

to put the Instagram acquisition into perspective, today’s chart shows the price paid per user in the acquisitions of selected tech companies. Facebook paid approximately $29 per Instagram user, a number that looks reasonable when compared to the $111 Yahoo! paid per user in its acquisition of Flickr in 2005!

Take a look!

One thought on “The Billion Dollar Bargain

  1. Pingback: Facebook’s Slowdown? « vijaya prasad

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