Instagram has become one of the most popular apps used by millions of people worldwide, no wonder that investors would like to invest in Instagram stock. However, Instagram is a subsidiary of Facebook, which has recently been renamed, Meta. The company is privately held by Meta, and therefore only an investment in the parent company would give investors exposure to Instagram.
The app initially released in October of 2010, has been one of the most used apps worldwide. Today Instagram has roughly one billion users worldwide, which is the equivalent of over 12.5% of the global population.
Mike Krieger and Kevin Systrom developed Burbn, a check-in app that allowed users to check different locations, and to plan with friends. The app also allowed to share photos of these meetings, and that is what the founders noticed the increased number of users interested in sharing their moments. This was a pivotal point, leading to the creation of a photo-sharing app.
Instagram received several rounds of funding, which helped the company fuel its growth. Nearly 2 years after launching the app, Facebook, now Meta, stepped in with an offer to buy Instagram. The company at the time had no more than 13 employees and did not have significant revenue. However, Mark Zuckerberg noticed not only the potential of the app but also the risk of it competing with Facebook.
Instagram was eventually acquired for $1 billion, soon after Facebook’s IPO. Over the years, Instagram has become one of the most successful acquisitions ever made. It took a daring and risky approach by Mark Zuckerberg to notice not only the potential of Instagram.
At the time lots of financial analysts were skeptical of Facebook’s approach, especially when it comes to the Instagram acquisition. It was one of the most debated topics, following the IPO of the company.
Could there ever be an Instagram stock?
There are several scenarios under which we could see an Instagram stock IPO. One of them is if Meta decides to spin off the company into a separate entity, even if it still holds a significant stake. This could be an option because Instagram’s growth over the years has far outpaced Facebook. Therefore, investors would certainly attribute a higher valuation to Instagram, especially when compared with Facebook.
Split up of Meta, and the Instagram stock IPO
Another scenario that is not entirely out of the picture is if the company is forced to split up. Facebook has been targeted by a new antitrust lawsuit. Mark Zuckerberg's business methods have been questioned multiple times. It is undeniable that Meta holds a sort of “monopolistic” position when it comes to social media. Their platforms are the main choice of millions and millions of people worldwide. This creates a situation where the company might take advantage of this to remain the market leader.
It is a not so unlikely possibility that the company might be split up. It would not be something unprecedented, in fact over the last century Standard Oil antitrust lawsuit eventually forced the company to be split up into different entities.
If something similar happens to Meta, investors would finally be able o invest in an Instagram stock.
Investing in Meta is like investing in Instagram stock
Although there is no way to solely invest in an Instagram stock, there is Meta, the parent company. Investors wanting to get exposure to Instagram’s explosive growth can then invest in Meta. Meta has currently 2.9 billion users worldwide on all of its platforms.
This is nothing short of remarkable, and it is one of the reasons the company recently reached over $1 trillion in market cap. This makes it one of the most valuable companies in the world and puts Mark Zuckerberg as one of the most visionary and daring founders of its generation.
What would be the valuation of an Instagram stock?
An Instagram stock IPO would certainly be one of the hottest and most anticipated IPOs in the world. The company dominates its own market and remains one of the most used apps worldwide, which is still growing at a fast pace.
This would imply that the valuation of such a company would be high, especially given its competitive advantages. In fact, a case could be made that Instagram as an individual company, could be valued at a much higher level than if it is under its parent company Meta.