With Facebook’s Q2 earnings right around the corner on July 27, Wall Street is taking stock of its estimates for the company’s mammoth ads business.
One particularly bright spot: Instagram, the photo sharing app that’s owned by Facebook.
“Our conversations would suggest Instagram ad loads are rising faster than our initial expectations,” UBS analyst Eric Sheridan writes in a note to investors on Tuesday.
UBS has subsequently raised its estimate to $550 million in Instagram revenue for Q2.
Facebook doesn’t actually break-out Instagram’s financial numbers, but Sheridan estimated that $330 million of its $5.38 billion in revenue last quarter came from the photo-sharing app.
“Given the momentum we have seen over the past 9 months (i.e., since the rollout of monetisation) and the continued strength in Instagram user growth (reaching 500mm users in June), we are raising our full-year estimate for Instagram to $2.27bn for 2016,” Sheridan continues.
Given that Instagram only started ramping up its ad business broadly last year, those numbers imply that Instagram has essentially created a $2 billion business in about a year.
The UBS estimates are quite a bit higher than another estimate we saw this week: SunTrust’s Robert Peck, who has called Instagram the “story of 2016” for Facebook, pegs its revenue at ~$1.5 billion in 2016 and ~$3 billion in 2017.
Here’s how UBS expects Instagram’s revenue to continue to rocket:
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