Wednesday, February 5, 2020

Instagram, Acquired For $715 Million Brings Facebook $20 BILLION Revenues Last Year (FB)

I don't care what the margins are, that has to be one of the best acquisitions of all time.
The poster child for operating companies (as opposed to portfolio positions) working out really well is Berkshire Hathaway's acquisition of See's Candies—$25 million purchase price, $1.3 billion in cumulative free cash flow through 2007 when Warren wrote about it—which, as much as the insurance operations provided the early cash for BRK to buy other stuff.

From PYMNTS.com:
Instagram Pulls In Over 25 Pct Of Facebook Ad Revenue
It appears that Instagram generated more than a quarter of Facebook’s total revenue last year, according to sources.

The photo-sharing social media giant was acquired by Facebook in 2012 for $715 million. Last year, Instagram generated around $20 billion, though the sources for that information remained anonymous because the figures weren’t yet public.

The stats would beat Google-owned YouTube, which drew in $15.1 billion in ad sales, according to parent company Alphabet. Per their recent ad sales report, numbers have been disappointing for Alphabet, as analysts had expected more returns from customers who watch videos online.

Sales growth is slowing on the main Facebook app, and Instagram has become increasingly important to the growth of the social media behemoth as users continue to flock to the platform. The company doesn’t disclose separate revenue rates for its properties – instead, it highlights their integration as a “family of apps.”

Critics, including original Facebook Founder Chris Hughes, have said Facebook’s acquisitions of various other social media-type entities like WhatsApp and Messenger could pose the risk of eventually breaking up the company from a technological standpoint.

When Instagram was initially acquired by Facebook, it had no direct way of earning revenue. Today, it earns advertising revenue just as Facebook does. To help increase Instagram’s sales, Facebook has ramped up the number of ads on the platform in the last few years, particularly as Facebook’s own feeds have become more populated with marketing posts....MORE
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