MOSCOW, December 20 (Sputnik) — The Facebook-owned photo-sharing online service, Instagram, is valued at $35 bln by Citigroup, 84% more than previous estimates, as its commercial potential has been bolstered by an accelerated growth in users, advertisement earnings and overall investment appeal.
Instagram has thus turned out to be an extremely lucrative investment for Facebook founder Mark Zuckerberg, who purchased the service back in April 2012 for what now seems a hilarious sum of $1 bln.
Citigroup believes that, albeit Instagram’s current contribution to Facebook’s total revenues is insignificant, the service has a huge potential for commercialization by extracting money off its users and data assets, as well as capitalizing on high user activity by putting more advertisements on the website at a higher fare.
In case Instagram’s current commercial potential is fully exploited the service would bring in as much as "$2 billion in high-margin revenue at current user and engagement levels,’ May wrote, according to Business Insider.
Investors should buy Facebook shares now, May suggested, reviewing their target price from $86 to $91.
“Not only is Instagram’s audience now larger than Twitter, but its users are about 1.8 times more engaged, and user growth has been greater,” May wrote. “Instagram is at the early stages of rolling out advertising, but we believe brands have and will find it an effective channel.”
The growing popularity of the photo-sharing service had triggered the emergence of numerous spam accounts. Instagram has recently boosted its advertising efficiency by erasing millions of spam accounts during the so-called ‘Instagram Rapture’. As indicated by recent developments, Facebook might be preparing for greater commercialization of its services in 2015.