Is Instagram Going To Bring Any Change To Facebook Earnings?
The social media giant is currently not receiving any returns from its investment in Instagram which has worried the analysts and investors alike
Facebook Inc bought Instagram around three and a half years back and since then. The media company has been asked questions regarding the profit that it could possibly turn out to get the photo sharing app. The app has been shown to be quite a popular one and is being used by a large number of people but the company has so far not done anything to generate money out of it, which has now began to worry the investors in the company. On a different side, the giant seems to be working quite successfully with its main social media website and has been generating huge amounts of revenue for itself.
However, the fact that Instagram was obtained by the media giant in a massive price of $1 billion is what is making the questions arise. Analysts and investors are waiting for a break that the giant is going to make the photo app, to cover up the money that was invested in it. Analysts were previously sure of the fact that the social media company might have something on its mind before it took over the fast growing app, but now after such a long period of three years and more, the doubts seem to be increasing. Also, it is now being contemplated by the same analysts that maybe the big numbers that Instagram is expected to generate if it gets monetized by Facebook business might just be a little too bullish.
In the upcoming earnings report that Facebook tech is preparing currently, the giant is not expected to report anything big coming in from the business Instagram has so far made, which has started to worry the analysts now. According to them, the $1 billion acquisition needs to be monetized sooner than later as carrying forward such a huge business without any returns is going to bring the social networking company into trouble. Furthermore, the COO of the company, namely Sheryl Sandberg, has repeatedly informed the market pundits and investors that it will take some time before the giant actually starts receiving some returns out of it.
As far as the predictions are concerned for the revenue to be generated by Instagram, some analysts go as far as presenting expectations of a revenue generation of $6 billion by the next five years which is majorly dependent on the fast growth of its monthly active users, which increased from 400 million to 680 million in only a period of a single month.