Facebook Inc (NASDAQ:FB) gained after an analyst at Topeka Capital predicted that its photo and video sharing platform, Instagram could reach one-third of its size in two years.
The stock price of Facebook Inc (NASDAQ:FB) increased almost 3% to $78.30 per share at the time of this writing around 11:50 A.M. in New York.
Yesterday, Instagram reported that it has more than 300 million monthly active users (MAUs), a major milestone as it surpassed Twitter Inc (NYSE:TWTR) with 284 million users.
Instagram continues to benefit from Facebook
Topeka Capital analyst Victor Anthony noted that Instagram passed 300 million MAUs approximately 9 months after reporting 200 million MAUs. That means Instagram added more than 100 million users in less than a year.
Anthony emphasized that Instagram continues to benefit from its relationship with Facebook Inc (NASDAQ:FB). The social network giant acquired the photo and video sharing platform for $1 billion on April 2012. Since then, Instagram achieved a remarkable growth.
“Instagram is now one-fifth the size of FB, but could reach 500M users in two years to reach one-third the size of Facebook .At that level, the monetization and valuation implications are significant,” said Anthony.
The analysts maintained his Buy rating for Facebook Inc (NASDAQ:FB) with a price target of $96 per share.
Instagram CEO said keeping Instagram authentic is critical
Instagram CEO Kevin Systrom said “keeping Instagram authentic is critical” as more people join the platform. According to him, they are doing everything to keep Instagram free from fake and spammy accounts. His team has an ongoing effort of deactivating those spammy accounts to improve user experience.
Systrom also said that it’s a big challenge for him and his team to keep up with Instagram’s pace of growth. He also said that it was hard to compare Instagram with Twitter Inc (NYSE:TWTR) because the latter has a more mature business and it is a public company.
“We’ve just started monetizing. We have a lot to prove before we’re, you know, worth many billions of dollars,” said Systrom.
Last March, Instagram signed a $100 million deal with Omnicom Group Inc. (NYSE:OMC), an advertising agency. The deal was expected by analysts to add $240-$485 million to the revenue of Facebook Inc (NASDAQ:FB) this year.