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Instagram Passes 2 Billion Users: Why This Acquisition Was One Of The Best Ever

Benzinga · 12/15/2021 22:13

A leading social media platform may have passed a significant milestone, according to reports. The milestone could make a questionable 2012 acquisition continue to look like one of the best of the last decade.

What Happened: Instagram, owned by Meta Platforms (NASDAQ:FB) passed two billion active users earlier this year, according to employees who relayed the information to CNBC.

The milestone was passed around October, when Facebook announced a rebranding to Meta Platforms.

Facebook does not disclose its figures for Instagram subscribers, last sharing a figure in June 2018 when Instagram passed the one billion monthly active users mark. It took Instagram eight years to hit one billion users and only three to reach two billion.

Facebook ended the most recent quarter with 2.9 billion monthly active users for its main app. Facebook’s main app has grown its user base by 30% in the time it took Instagram to double. Revenue growth of 18% is expected for the Facebook app next year, compared to 30% growth for Instagram.

Why It’s Important: Facebook acquired Instagram for $1 billion in 2012. At the time of the announcement, many questioned the large price tag paid for a company with less than 25 employees and around 80 million subscribers.

Instagram has been a source of huge growth for Facebook and also comes with some headaches with recent inquiries from lawmakers and regulators.

Rival TikTok, meanwhile, has taken some growth away from Instagram. TikTok passed one billion users in September. A survey from Forrester showed 63% of Americans aged 12 to 17 use TikTok weekly versus 57% for Instagram.

The acquisition of Instagram was announced shortly before Facebook had its IPO on May 18, 2012. The deal was seen as an overpayment, but has turned into one of the best acquisitions in terms of user growth.

Facebook took a company that was not monetizing or making money and turned it into one of its most powerful acquisitions ever.

Valuation for Instagram as a stand-alone unit has been placed at $100 billion or more, which could mark a huge return on investment for Facebook if the social media giant ever decides or is forced to sell or spin off Instagram.

Price Action: FB shares closed 2.37% higher on Wednesday at $341.66. Shares have traded between $244.61 and $384.33 in the last 52 weeks, hitting a $1 trillion market cap in 2021.