Displaying items by tag: instagram

(San Francisco)

Big tech companies got hit badly in last quarter’s selloff. On top of that broad volatility, Facebook has been going through its own particular troubles, most specifically related to the potential impact of its data leaks. However, all the bearishness may be in the past, and right now could be an excellent time to buy the stock, at least according to Jefferies. “FB’s status as leader in Social is unchanged and we see continued upside for FB shares as it digests the social hangover … FB remains a tier 1 platform for advertising spend with Instagram showing positive drivers of growth”, says the bank’s research team. The big growth driver is Instagram, whose revenue is growing at an estimated 60% annually. “We believe over the course of ’19, shares will slowly re-rate as rev growth & margin outlook become clearer”, says Jefferies.

FINSUM: We would tend to agree with this assessment. Despite all the concerns over data privacy, Facebook still has a very solid underlying business that is growing strongly.

(San Francisco)

Two of Instagram’s founders have just left Facebook on acrimonious terms. The departures come six years after their company was bought by Facebook for about $1bn. They are leaving on poor terms because of recent changes Facebook has made which seem to prioritize Facebook’s growth at the expense of Instagram. Many analysts say the departures are a considerable negative for the stock, especially coming as part of a long string of troubles. There is also a serious threat that the two founders may come up with a competing product. Instagram accounted for 14% of Facebook’s revenue, or about $7.5 bn this year.

FINSUM: We don’t think a competing product is a worry, at least not yet. But image-wise, it does look like Facebook is a bit out of control.