December 25 ,2014 | by Hari Sri

Instagram’s £22 billion valuation outstrips Twitter’s

The value of Instagram has overtaken that of Twitter’s, putting it at a whopping £22 billion.

Citigroup recently raised the valuation of Instagram to £22 billion, or $35 billion, which is almost double what it was valued at previously. By comparison, Twitter has a valuation of £15 billion based on its current share price.

 

This follows on the heels of a recent announcement from Instagram that showed it has 300 million monthly active users, outstripping that of Twitter which has 284 million. Since Instagram recently purged itself of millions of fake accounts in a move dubbed the “Instagram Rapture”, these figures show real growth.

The social media company has become increasingly popular with the younger generation and serves as a simplified news feed where every item is picture based, rather than having to deal with a fast, text-based feed like that of Twitter.

 

The popularity of Instagram has tripled since 2012

Instagram was bought for $1 billion by founder of Facebook, Mark Zuckerberg, in April 2012. At the time, it only had 100 million active monthly users. Since its popularity has tripled since then, it likely has reserves of potential for monetisation that have yet to be tapped.

 

“While Instagram is still early in monetising its audience and data assets and its financial contribution to Facebook is minimal today, we believe that it is quickly gaining monetisation traction,” said Mark May in a report, the Citi analyst responsible for the £22 billion valuation.

“Not only is Instagram’s audience now larger than Twitter, but its users are about 1.8 times more engaged, and user growth has been greater,” he added.

In fact, he believes that if Instagram were fully monetised it could add over $2 billion in high-margin revenue, and continued to say that 2015 will herald “more meaningful off-Facebook revenue streams”.

As Instagram only added ads to its photostream a little over a year ago, and debuted video ads quite recently, Mr May believes that “brands have and will find it an effective channel”.

Hari Sri

Hari is the LSBF Blog's News Editor. He manages the editorial content on the blog and writes about current affairs, SME, entrepreneurship, energy, education and emerging market news.

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