Sarah Roden

About the Author Sarah Roden

Sarah writes about stock market news for TipRanks. She graduated as member of Phi Beta Kappa from the University of Richmond in Richmond, Virginia.

Facebook-Owned Instagram Hits 300M Monthly Active Users

Instagram, owned by Facebook (NASDAQ:FB) has announced a record-breaking 300 million monthly active users. The mobile photo-sharing and social networking application has surpassed Twitter, which has 284 monthly active users. Instagram has successfully created a global and creative community. There are now over 70 million photos and videos posted on Instagram each day with 70% of users coming from outside the United States. However, Instagram is still dwarfed in comparison to Facebook, which has 1.35 billion monthly active users as of October.

Instagram has also announced plans to verify authentic accounts of celebrities, athletes, and brands with badges on their accounts. This feature will be rolling out within the next few days. Instagram is a valuable tool for celebrities as it allows them to instantly connect with their fans on a personal level. Additionally, Instagram has reaffirmed that they will continue to deactivate and delete spam accounts to maintain the legitimacy of the community.

In April of 2012, Facebook bought Instagram for a $1 billion price tag. It is unclear how much revenue Instagram brings to Facebook, if any. In a December 10th interview with the Wall Street Journal, Instagram founder and CEO Kein Systrom said that Instagram only began advertising efforts six months ago. The company does not want to rush into advertising for fear of alienating the community. Instead, the photo sharing platform will focus efforts on growing the community while easing into effective advertising.

On December 11th, analyst Benjamin Swinburne of Morgan Stanley reiterated an Overweight rating for Facebook but removed his $90 price target. Swinburne noted, “At 300m MAUs, Instagram is still in its early innings, in our view. We believe Instagram will increasingly become an important asset for Facebook as digital budgets shift to branding given the platform’s premium content. Though a small revenue driver, we estimate Instagram reaching $4bn in 4 years.”

Swinburne has a 61% overall success rate recommending stocks with an average return of +3.7% per recommendation.

Separately on December 11th, analyst Victor Anthony of Topeka Capital maintained a Buy rating on Facebook with a price target of $96. Anthony acknowledged Instagram’s milestone of reaching 300 monthly active users noting, “Instagram is now one-fifth the size of FB but could reach 500M users in two years to reach one-third the size of Facebook. At that level, the monetization and valuation implications are significant.”

Anthony has a 57% overall success rate with a 14.6% average return per recommendation.

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