Facebook Completes Its Largest Acquisition To Date

Earlier today, Facebook announced that they had purchased Instagram for $1 billion in cash and stock.

Instagram is a photo-sharing application/social network that allows you to take a picture with your iPhone or Android device and then apply a filter. Friends and followers can then "like" and comment on your photos.

In case you didn't catch that - Facebook is paying $1 billion for a mobile phone app. Times have changed.

Having said that, Instagram's growth has been nothing short of amazing. The company currently has nearly 30 million users, and they just released an Android version of their application last week. Prior to that, Instagram had just been available to iPhone users. According to the company, more than 5 million pictures are uploaded to Instagram every day.

Instagram received its first $500k in financing in March of 2010, and followed that up with a $7 million round in February of 2011 and a $50 million round earlier this month. The $50 million round, which was rumored to have valued the company at $500 million, was led by Sequoia Capital. That's a pretty decent 100% return for a one week investment.

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The bigger story here is Facebook flexing its muscles and putting some of their future market value to work.

Facebook is expected to go public in May in what is going to be one of the most anticipated IPOs of the past few decades. The company is expected to have a value of approximately $100 billion after they go public.

Why does this matter? One can only assume that Facebook will be on the prowl for more companies that will help add to their already enviable growth.

With a value of $100 billion, Facebook will have a great deal of ammunition that they will be able to use to acquire smaller companies such as Instagram.

Source: NY Times: Facebook to Buy Photo-Sharing Service Instagram For $1 Billion

Filed under: General Market News