but why?
I have a few friends that participate in the "influencer scene" (as influencers themselves and as marketing reps at companies who purchase posts from influencers) and it's basically an open secret at this point that aside from a select few celebs, any given influencer has an entire army of bots behind them to promote their posts. Getting on the top of the discover queue is basically just down to who has the bigger bot network.
What I'm trying to say is that, like Twitter, IG will probably start to lose a lot of public respect and valuation if they keep boasting "we have 1 billion active users!" once the general public starts to get wind of the fact that the 1 billion number is bullshit.
I saw a hot girl with 1M followers. So I decided to check out her website.
Website looked like a bland woocommerce store, no soul, just the girl selling pictures of her and underwear.
I went to alexa's Site Info and saw her website was ranked top 5 million or something poor. However, her rank in india was top 100k. The girl was not Indian, she had botted/paid so much that her fake traffic was visiting her website more than her real traffic.
I guess I'm thinking I should start botting? I already make an instagram 'like' bot on friday in 60 minutes.
Take average PE ratios for example, about 15 (so 6.6% earnings as a percentage of market cap).
That would require about $6 per user per year in profit. Facebook is at $6 average revenue per user (ARPU) right now, but >$25 for US users for example, and growing.
Instagrams revenues are currently around $7b with a fraction of that profit, and at current growth rates, the valuation isn't crazy.
If the average user spends 1 hour per day, that's 365 hours per year at $5 or about 1 penny per hour of use. It's not hard to squeeze in a penny worth of profit from ads per hour of use. This would get you at $6b net income. Given that's in the cards for the future, the valuation isn't crazy.
The only flaw investors can make is that growth either isn't sustainable (I think it is for quite some time), or that Instagram users will eventually move on to other things (e.g. Myspace) such that the years of profit will be shortlived (more likely). Nobody invests $100 to gain $5 per year for a short period, that's based on perpetual income expectations which would require Instagram to stay around for quite a long time.
Instagram's innovation strategy is working out nicely > new features are launched, and are loved by it's users.
On top of that they are now also focusing on SMBs (mostly in NBUs) with Whatsapp Business. (That branch could add >100M users)