Facebook’s $1 billion purchase of Instagram is looking pretty damn good right now, at least according to research from Citigroup.
Apparently the firm believes that Instagram is now worth $35 billion – and that’s a conservative estimate.
“While Instagram is still early in monetizing its audience and data assets, and its financial contribution to [Facebook] is minimal today, we believe that it is quickly gaining monetization traction, and would contribute more than $2bn in high-margin revenue at current user and engagement levels if fully monetized,” Citigroup said in a research note, as reported by Mashable.
That would place Instagram in the realm of a company like Uber, who was just given a $41 billion valuation with its latest round of funding.
Citigroup is definitely banking on Instagram’s potential, as the social network has barely begun the monetization process. Facebook was very cautious in attempting to turn the photo-driven network into a cash cow – only debuting ads as recently as November of 2013. But that strategy is expanding, as Instagram is now debuting video ads (on a limited basis, of course).
Instagram has said it is starting slow with the advertising … literally.
“We’re starting slow with advertising to make sure we take time to get the experience right for our ad partners and the Instagram community,” says Instagram in response to the question How do I advertise?
But the potential is there. Especially when you consider that every report that comes out about brand engagement puts Instagram well above services like Twitter and even above Facebook.