How Much Of Facebook’s Value Is Driven By Instagram?

by Trefis Team
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Despite the spate of privacy issues around Facebook‘s (NASDAQ:FB) core business, the company has been able to grow its revenue at a fairly rapid clip. Although Facebook expects its growth and margins to moderate in response to the company’s investments in the health of the platform, Instagram continues to be a strong asset in the company’s portfolio. We estimate that Instagram generated as much as $5.5 billion in revenue – or 10% of Facebook’s total revenue – for 2018.

Our interactive dashboard on Instagram’s Contribution To Facebook outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes, and see all of our Technology company data here.

While Facebook does not break out Instagram’s revenues, we estimate that Instagram’s user base of over a 1 billion delivered an average revenue per user of around $5. In addition to having overtaken Snapchat as the world’s most popular photo sharing app, Instagram is increasingly becoming a go-to destination for marketers wanting to differentiate themselves beyond the traditional social media offerings. Coupled with Instagram’s (and Facebook’s) commerce ambitions, we believe that Instagram may reach as many as 1.6 billion users by 2020, which would lead to it accounting for an even larger portion of Facebook’s revenue.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Facebook.

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