Meta Platforms Inc. CEO Mark Zuckerberg made a big bet by acquiring photo-sharing service Instagram for $1 billion exactly 12 years ago. The acquisition was expensive at the time – it was announced days after Instagram raised funds at a valuation of $500 million.
However, Zuckerberg’s bet (at the time) has paid rich dividends over the past few years. Instagram has been making more money from ads than Alphabet Inc.’s YouTube, despite the latter’s dominance in the video streaming industry.
Instagram was being courted by the two dominant social media platforms at the time, Twitter (now X) and Facebook (now Meta Platforms.)
While X offered $500 million to acquire Instagram, Meta Platforms offered twice as much.
But it wasn’t just about the money for Instagram when it came to Meta Platforms – its co-founder Kevin Systrom and Zuckerberg developed a friendship months before Instagram chose to go with Meta Platforms. Zuckerberg also offered something important to Systrom – independence.
If you were to believe in Zuckerberg and invest $1,000 in Meta Platforms when it acquired Instagram in 2012, here’s how much you’d have.
Meta Platforms stock price from May 18, 2012, till today
Meta Platforms’ stock, adjusted for stock splits and other corporate actions, was $38 on May 18, 2012, which is when it went public and was listed on the stock exchanges.
Its stock price today is $519.25, which is an increase of 1,266% during this period.
Value of a $1,000 investment in Meta Platforms stock, and the Nasdaq and S&P 500 indices, respectively, from May 18, 2012, till today
If you had invested $1,000 in Meta Platforms stock on May 18, 2012, today, you would have $13,582.
Likewise, if you had invested $1,000 in an index fund replicating Nasdaq, you would have $5,849.
A similar $1,000 investment in an index fund that replicates the S&P 500 would be worth $4,017.
Instagram A Bigger Money Maker Than YouTube
According to court documents filed last week, Meta revealed that Instagram made $32.4 billion in 2021, $22 billion in 2020, and $17.9 billion in 2019 from advertising services.
In contrast, YouTube made $28.8 billion, $19.7 billion, and $15.1 billion from advertising during those three years.
A Bloomberg report states that the share of Instagram’s ad revenue in Meta’s overall revenue has surged from 26% in 2020 to almost 30% in the first six months of 2022.
