Cramer's Charitable Trust: Facebook's Instagram Is Picture Perfect

 | Sep 24, 2015 | 3:20 PM EDT
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The following commentary was originally sent to Action Alerts PLUS subscribers on Sept. 24, 2015, at 1:37 p.m. ET.

On Tuesday afternoon, Facebook's (FB) Instagram announced that it had surpassed 400 million monthly active users (MAUs) for the first time in the roughly five-year history of the product. Most recently, the company had reported that it boasted a 300 million MAU base in December of last year. Interestingly, more than 50% of these new 100 million users live in Europe and Asia and roughly 75% of the entire user base is international, highlighting the platform's broad base appeal.

The rapid growth of Instagram is a positive sign for the product's future monetization potential and contribution to Facebook's ever-growing social media empire. Comparatively, it took Facebook six years to reach 400 million MAUs, so this achievement is nothing to ignore.

Facebook has already begun to monetize the subsidiary, recently opening Instagram's ad platform to all businesses, but the process is still in its early stages. As we have previously noted, the ad platform is already poised to be a top destination for promoters with its wide array of options, including 30-second video ads, landscape photo and video, optimization tools for campaign management, and a new premium ad product to drive mass awareness. Even better, as Instagram continues to grow, it will undoubtedly become even more appealing to advertisers of all sizes, building the potential for $1 billion in revenue over the next year. It seems simple, but more users mean more eyeballs and clicks, which ultimately results in a larger prospective customer base for marketers.

Instagram is the clear leader in its niche, and through the leadership and backing of Facebook's management team, we are confident that it will continue to blossom into true value for Facebook shareholders. CEO Marc Zuckerberg and his team have magnificently turned Facebook into an advertiser's dream, and there is no reason to think they won't achieve the same with Instagram. Reaching 400 million MAUs on the platform is just another incremental milestone to help remind the bears just how much growth is still to come in the Facebook ecosystem (and don't forget WhatsApp's 900 million MAUs and FB Messenger's 700 million MAUs).

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