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Juniper Analyses the Instagram Acquisition

April 13th, 2012 by Arjan Olsder Posted in Companies & M&A | No Comments »

Charlotte Miller from Juniper has written about Facebook’s acquisitions before. Today, she wrote her view on the acquisition of Instagram by Facebook. What made the company worth a billion to The Social Network.

Certainly this question can’t be answered by commenting on Instagram revenues – it doesn’t have any, despite a user base of 30 million and growing. Facebook will need a dollar a month from them over the next few years to break even on this investment, something which looks unlikely based on Facebook’s IPO figures which suggest that ARPU on the network is around $0.35 a month. This is even more worrying when you consider that Facebook does not currently generate significant revenues from mobile.

Read on.

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