Facebook Inc. (NASDAQ:FB) may be having a difficult time monetizing its own ubiquitnousness and turning its 900 million users into 900 million dollars per month, but the brand seems to have a very positive effect on other companies – especially those that Mark Zuckerberg buys and takes over.
Facebook Inc. (NASDAQ:FB) worldwide visibility has paid off big for its most recent addition, Instagram, which was bough for a little less than $1 billion (23,000 shares of stock plus about $300 million cash) when the deal was finalized last week. Instagram was an up-and-coming company when Zuckerberg approached Instagram this past spring with the purchase offer. Before the offer, Instagram had just nine employees and essentially no revenue, boasting less than 900,000 daily active users (DAUs).
About six months later, and Instagram now can brag about 11 million users daily – using a calculator, that is an increase of traffic of more than 1,100 percent. An 11-fold increase in daily traffic.
And due to the lowered value of Facebook Inc. (NASDAQ:FB) stock at the close of the sale last week compared to when the stock was offered during the spring (with an IPO value of $38 each), and this deal seems like even more of a steal than it might have looked at even $1 billion.
Was there something that the Facebook Inc. (NASDAQ:FB) CEO knew about his brand that others did not, when some criticized the amount of money Zuck offered for Instagram? At this point, it seems so – it seems that Zuck might have knows that his company was going to provide much more visibility for Instagram than it was getting on its own, and he knew that the Instagram business relies heavily on users and views – which as been the Facebook Inc. (NASDAQ:FB) model all along.