Instagram is a popular application that allows users to take and share distinctive polaroid-style photos using mobile phones. A simple enough offering, apparently, but for Facebook – a service born out of the desktop browsing era – such an application holds significant appeal. Facebook, which has some 850m users, still struggles to make money from its mobile offerings, and the deal also keeps the Instagram technology and its 30m users away from rivals such as
However, the $1bn price tag for Instagram looks toppy, particularly as the company is under two years old and has yet to generate any revenue. Moreover, Instagram recently offloaded a 10 per cent venture capital stake for $50m – suggesting that the entire company is worth no more than $500m.
Punchy valuations are hardly new to this sector.
With limited growth prospects, a forward earnings multiple of 17 looks too high for Yahoo. However, Microsoft's shares, rated on around 11 times forecast earnings, are cheaper. But, with smartphone penetration at just 10 per cent of the global population, it's the mobile market segment that boasts the best prospects. On that basis, mobile phone payment system software group