Here's Some New maths On Facebook's Instagram Buy

kevin systrom, ignitionInstagram CEO Kevin Systrom will soon be working for Mark Zuckerberg.

Photo: BI Video

The Federal Trade Commission has cleared Facebook’s purchase of Instagram, a fast-growing startup which threatened Facebook’s seeming lock on sharing photos with friends.So what’s it worth now?

The cash and stock Facebook agreed to pay, originally $1 billion in total, now amounts to $747 million based on Facebook’s current stock price.

Here’s another way of looking at the price: Facebook originally paid $33 for each of Instagram’s 30 million users when the deal was first struck in April. It’s now paying closer to $9 a user, as Instagram’s user base has exploded to 80 million, propelled by Instagram’s porting its app, formerly iPhone-only, to Android devices.

In March at Business Insider’s Ignition West conference, shortly before he struck a deal with Facebook CEO Mark Zuckerberg to sell his company, Instagram cofounder Kevin Systrom said he hoped his service would have 270 million users one day.

Compare that to Facebook, which is currently worth $53 billion (if you assume 2.74 billion shares outstanding). Facebook has just under 1 billion users. The market is valuing each Facebook user at far more than Facebook is valuing the Instagram users it’s buying.

So purely on a price-per-user basis, the Instagram deal is looking better and better.

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