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What exactly is Instagram?
Before you think about buying Instagram stock or any stock for that matter you need to know the company that you are investing in. Do not treat buying stocks as a casual Endeavour, you need to make sure you do proper research into what you are investing in. Thus in the case of Instagram stock you need to know what Instagram is. Instagram is basically an application through which you can share photos and small videos. Users make profiles on Instagram and can post their content on their pages which is then displayed to those who follow them. You can follow people from whom you want to get updates from and people who want to see your content can follow you too.
The purpose of Instagram is simple; to instantly share images and videos. The feed you view on Instagram has not other content on it other than pictures and videos which can be scrolled through quickly. And earlier this year, Instagram introduced a feature known as the ‘Instagram Stories’ through which users can upload certain pictures and videos to their profile which will only exist for 24 hours and can only be viewed if a user clicks on the story to view it.
Currently, it has been estimated that Instagram has over 500 million users with thousands more joining every single day. Their recent addition of ads has meant they are making a lot of money and in 2016 alone it was estimated that Instagram made over $1.5 billion.
The Facebook Take Over of Instagram
It has been quite a while since Facebook took over Instagram. They bought the company in 2012 for a whopping $1 billion! The fact that Facebook now owns Instagram is very important because this means that Instagram stock is not available on its own. If you want to get Instagram stock then you automatically need to get Facebook stock since Instagram stock is built into it already.
The initial public offering of Facebook’s stock took place in May 2012 after they had acquired Instagram. Since then Instagram stock has been calculated into Facebook’s own stock. The first time Facebook offered stock, they priced it at $38 per share and offered up about 421,233,615 shares. From that initial offering alone Facebook made an astounding $16 billion.
So if you look at the investment, $38 dollars for Facebook and Instagram is actually pretty great since both are giants in the social media application world and hence combined give you a great chance for a good return on investment. Investing in Facebook is a genius move because it will look great on your investment portfolio since the tech giant is nowhere near done and only keeps getting bigger and stronger in the market.
Why buying Facebook and Instagram stock is a Great Idea
These days investing in sound ideas and companies is incredibly important. At times there are companies which are incredibly popular one minute and doing great but the next minute their stock plummets and they shut down. Thus you need to make sure you choose a company that not only has current success but will also fare well in the future.
This is an especially concerning when it comes to tech companies as well as websites and applications because their current popularity does not define whether they will always stay popular. We can take the popular example of the app Vine where people shared short video clips which was incredibly popular but after enjoying peak success their popularity plummeted and the company found itself closing down.
Thus with Facebook and Instagram, this is not a particular worry since the websites are known for innovating and changing their styles. They keep up with customer demand and make sure they keep up with new trends and give users a better user experience. This has kept Facebook successful for the last almost 10 years. And the same formula is what keep Instagram successful. Thus investing in Instagram stock is a good idea as the company ensures they always stay on top of their game and are always relevant so that they retain their user base and popularity.
History of the Instagram stock
Currently, as of December 2017, Facebook stock which is also Instagram stock is at approximately $171 per share. From the initial price of $38 per share in 2012, this is an increase of more than 4 times!
It is no secret that Instagram stock does incredibly well because of their performance on a whole. The company is very popular and because of the tie in of Instagram stock with Facebook stock is even more so. Initially when Facebook offered its stock on the market, the first 3 months it did not do as well. The stock went down 50% and people started fearing it would crash and fall even further which forced a lot of people to sell their stock immediately as they feared a bigger loss in the future if they held on to that stock.
However, after the first three months, the stock rose. This was because of one major change; Facebook advertisements. Facebook started placing paid advertisements on the website so that they could make revenue after the company started doing this their stock steadily rose. Today, the stock is 550% of what it was at the initial public offering. This proves that while it was a risky move initially, the company did prosper.
Instagram stock Today and Now
Anyone who uses Facebook or Instagram knows how well the companies are doing in terms of advertisements and gaining revenue from it. Not to mention, they also charge Facebook pages for promoting their posts. According to statistics, Facebook makes about $1 billion from advertising per quarter! And during high spending months this figure increases. You can now imagine how successful the company is and since it is growing continuously in user base and popularity, there is no reason not to believe that this number will only go up now.
As far as Instagram goes, the story is similar. In 2016 alone, Instagram made $1.86 billion dollars from their advertisements and more. This is a clear indicator of how well the company is doing and is a sign of why it is a good idea to purchase Instagram stock.
The Future of the Instagram stock
While Instagram stock has enjoyed immense success and popularity which has further been elevated because of their association with Facebook, it is smart to believe that Instagram stock will also do similarly well in the future.
It has been projected that in the year 2018, Instagram will potentially earn $6.84 billion which is incredible! If nothing, this will only elevate the price of their stock even further because of the companies massive success. Thus it is a good idea to purchase Instagram stock right now if you can since in the future the prices will become even higher. This is simply because of the fact that Facebook and Instagram have both recently started to advertise increasingly on their mobile based applications as well. This has opened them up to a bigger audience which encourages advertisers to advertise and spend money on these apps to promote their product or services.
Furthermore, the fact that more people join these social networks everyday and people are increasingly becoming more accepting of advertising on social media and actually entertaining these advertisements instead of ignoring them, more and more advertisers will want to advertise on these platforms.
This means more advertising revenue which ultimately means more success for both Instagram and Facebook which will all lead to Instagram stock rising in both prices and popularity!
Instagram Stock and other Social Media Giants
When we talk about Facebook and Instagram stock we cannot ignore the fact that both these social media platforms have some heavy weight competitors; the main ones being Twitter and Snapchat. Facebook has long been making sure they dominate over both these social media platforms. When they saw Snapchat as a threat, they immediately made sure that Instagram would become a direct competitor with the social media app.
They did this by introducing Instagram stories; a feature which was exactly like Snapchat, where people could post images and videos to their Instgram profiles and these images and videos would disappear after 24 hours. This feature is now very popular on Instagram and directly tries to take on Snapchat. Thus it is clear from examples like these that Facebook and Instagram are here for the long run and are not going to let competitors take things away from them easily.
Another example is when Facebook introduced the Facebook live feature on both Facebook and Instgaram. Previously people only went online from Periscope, an app which let users live stream videos. However, after Facebook and Instagram introduced their live feature, people started to use these a lot and Periscope dwindled down in popularity to the point where it is now almost non-existent and has partnered with Twitter.
In short, Instagram stock is a great investment for multiple reasons as discussed above. Not only has the history of Instagram stock proven how successful they have been so far but the future projections and the direction the company is going in also assures that it will still stay popular in the future and thus their stock will most definitely increase in price and become even more profitable.
