Facebook Inc (NASDAQ:FB) investors were nervous about the company’s future when it splashed out $1 billion on Instagram just before its IPO last year. Skeptics are unlikely to be swayed, but today’s news that the photo sharing service has reached 100 million active users every month is definitely positive news.
Just one month ago, Instagram announced that it had 90 million active users every month. The increase to 100 million, representing a rise of ten million in just one month, is a prestigious rise, reflecting the popularity of the site. With its popularity secured, all the firm has to worry about is actually making money.
Instagram is just twenty-eight months old, having been founded in October of 2010. The site’s development has not been a smooth one, particularly in the last year. The photo sharing service had just begun to expand beyond iOS, when Facebook Inc (NASDAQ:FB) acquired it in April 2012. Since then the company’s expansion has surprised many, as it looked like it was losing users at several points.
As a public company beholden to its shareholders, Facebook Inc (NASDAQ:FB) is expected to make a profit. It is not expected to splash out $1 billion on a company that can’t pull in a profit. Instagram may be a great service that attracts millions of users, but it’s not a great business that attracts billions of dollars. The second is, for some reason, more important to shareholders.
The greater tilt toward monetization at Facebook Inc (NASDAQ:FB), and at Instagram by extension, may worry some users, but the Menlo park firm appears intent on not getting in its customers way, doing its best not to alienate people. Instagram is doing well, but shareholders are right to demand better.