What is Instagram?
Kevin Systrom and Mike Krieger launched Instagram, or Insta, on iOS in October 2010. They originally designed Instagram for the Apple iPhone to enable photo & video sharing. Instagram is now the sixth-largest social media network globally, with over 1.082 billion users this year.
There was never any Instagram stock publicly available because Facebook Inc. purchased Instagram in its entirety in 2012. There is no Instagram stock, but investors can buy stock in Instagram’s owner, Facebook Inc. (Ticker: FB). Facebook shows us that social media can be a good investment in today’s world.
Instagram Stock Symbol
The stock symbol for Instagram is [Ticker: FB] because Facebook Inc. is the parent company of Instagram and owns 100% of the Instagram stock. Buying Facebook stock is essentially the same as making a direct investment in Instagram.
Instagram Stock Chart
You can use the below chart to look at the Facebook/Instagram Stock Chart and Facebook’s rivals’ stock prices.
Only Facebook, YouTube, WhatsApp, Facebook Messenger, and Weixin/WeChat have more users than Instagram, Statista estimates. Instagram is the second most popular video-sharing app after Alphabet’s (NASDAQ: GOOG) YouTube.
YouTube was the world’s second most popular social media app with two billion users in July 2020, Statista estimates. Facebook, the world’s most popular social media platform, relies heavily on photo and video sharing to attract users. Facebook had 2.603 billion users in July 2020.
Other enormous social media companies, including TikTok, WeChat, and WhatsApp, also enable photo and video sharing. TikTok, the world’s fastest-growing social platform, is a video and image-sharing app. TikTok had 800 million users in July 2020.
The United States is Instagram’s largest market. Instagram had 110 million US users in 2019, Business of Apps estimates. Instagram’s other large markets are India and Brazil. Instagram had 70 million users in Brazil and 69 million users in India in 2019.
Unlike Facebook, WhatsApp, Facebook Messenger, and Wexin/WeChat, Instagram was built as a video and photo-sharing app. Instagram users can share individual photos or use the Stories feature to create stories.
Images made up 73.5% of Instagram content in 2020, Business of Apps estimates. Video accounted for 13.7% of Instagram content in 2020.
Instagram’s Unique Value
Instagram is a good way to reach younger people. Business of Apps estimates 66% of 18-to-24-year-olds, 60% of 25-to-34-year-olds, and 49% of 35-44-year-olds use Instagram. Business of Apps claims 41% of Instagram users do not watch television regularly.
Instagram Stories had over 500 million daily active users in January 2020, the Omnicore Agency estimates. Instagram had 500 million active daily users in January 2020.
Instagram users shared over 50 billion photos between October 2010 and January 2020. Instagram users uploaded over 100 million photos and videos a day in January 2020. Instagram users posted 4.2 billion likes each day in January 2020.
Instagram is popular; Pew Research estimates 37% of US adults used Instagram in February 2019. Instagram is the second most used social media in the United States. Pew Research estimates 63% of account holders used Instagram each day in 2019.
Recode estimates that the average American user spends 53 minutes a day on Instagram. eMarketer, in contrast, estimates that the average US user spends 27 minutes a day on Instagram.
Some people can make money on Instagram. Business of Apps claims Kylie Jenner made $1.3 million from a sponsored Instagram post in 2019.
5 Ways to Invest in Instagram or Its Competitors
1. Buy Facebook Inc. Stock
The data shows that Instagram is a popular and addictive social network. You can invest in Instagram by purchasing Facebook (NASDAQ: FB) stock.
Facebook (FB) bought Instagram for $300 million and 23 million shares of stock. Facebook acquired Instagram just before that public held its initial public offering (IPO).
Facebook is the biggest player in social media. Facebook owns four of the six largest social media platforms in the world.
Those platforms are Facebook with 2.603 billion users in July 2020, WhatsApp with two billion users in July 2020, Facebook Messenger with 1.3 billion users in July 2020, and Instagram with 1.082 billion users in July 2020.
I estimate Facebook’s platforms had 6.986 billion users in July 2020. Please note that many people use multiple social platforms.
Thus, Facebook’s value is that it dominates social media outside the People’s Republic of China. The only social media that successfully competes with Facebook’s platforms is Alphabet’s (NASDAQ: GOOGL) YouTube, with two billion users in July 2020.
Investors love Facebook because it makes enormous amounts of money. Facebook reported quarterly revenues of $18.697 billion, a quarterly gross profit of $14.858 billion, and a quarterly operating income of $5.963 billion on June 30, 2020.
Facebook is a fast-growing company; Stockrow estimates Facebook’s revenues grew at a rate of 10.67% in the quarter ending on June 30, 2020. Facebook’s revenues grew at a rate of 17.64% in the quarter ending on March 31, 2020.
Facebook did make less money during the coronavirus pandemic in early 2020. However, Facebook’s earnings recovered later in the year.
Facebook’s quarterly revenues grew from $17.737 billion on March 31, 2020, but fell from $17.590 billion on December 31, 2019. Facebook’s quarterly gross profit fell from $17.59 billion on December 31, 2019, to $14.278 billion on March 31, 2020. Facebook’s quarterly operating income fell from $8.858 billion on December 31, 2020, to $5.893 billion on March 31, 2020.
Value investors like Facebook because it generates enormous amounts of cash. Facebook reported a quarterly operating cash flow of $11.001 billion on March 31, 2020, that fell to $3.877 billion on June 30, 2020.
Facebook reported a quarterly ending cash flow of $23.927 billion on March 31, 2020. The quarterly ending cash flow fell to -$2.358 billion on June 30, 2020.
Facebook has enormous value; it had $58.24 billion in cash and short-term investments on June 30, 2020. Facebook had total assets of $139.691 billion on March 31, 2020. I think these numbers justify the $284.79 share price; Mr. Market gave Facebook on October 23, 2020.
Facebook may not be a good stock for ordinary people because it does not pay a dividend. Many dividend investors watch Facebook because it has the cash to pay a good dividend if Mark Zuckerberg wants.
An Instagram stock could appear on exchanges in the future if antitrust action breaks Facebook up. Many American commentators think Facebook violates US antitrust laws by owning three competing brands; Facebook, Instagram, and WhatsApp.
Investors could make enormous amounts of money if antitrust regulators force Facebook to hold initial public offerings (IPOs) for Instagram and WhatsApp. In the 20th Century, John D. Rockefeller Sr. became the world’s richest man when the US Justice Department broke his petroleum monopoly, the Standard Oil Company, into several companies. Rockefeller made enormous amounts of money because he owned huge amounts of stock in the new companies.
The Standard Oil example shows Facebook investors could make enormous amounts of money if the U.S. Justice Department breaks Facebook up. One result of a Facebook breakup could be to make founder Mark Zuckerberg the world’s richest man.
2. Buy Alphabet Stock (NASDAQ: GOOGL)
Alphabet (NASDAQ: GOOGL) is a holding company formed by Google management. Alphabet (GOOG) owns the world’s second most popular social media app YouTube and the world’s most popular search engine Google.
YouTube had two billion monthly active users in July 2020, the Omnicore Agency estimates. YouTube had 30 million daily active users in September 2019, and YouTube TV had one million pay subscribers in October 2020.
YouTube users watched one billion videos a day in October 2020, the Ominicore Agency estimates. YouTube received one billion mobile views a day in October 2020. Users upload 500 hours of video to YouTube each day, the Ominicore Agency estimates.
The Ominicore Agency estimates 73% of US adults use YouTube. Omincore estimates 78% of American men and 68% of American women use YouTube.
Ominicore claims 62% of businesses and 77% of Americans between 26 and 35 use YouTube. Omincore estimates 37% of American Millennials (age 24 to 39) binge-watch YouTube videos each day. YouTube is available in 100 countries and has 265 million active users in India.
Alphabet’s key holdings include the world’s most popular mobile operating system Android. Expanded Ramblings estimates Android controlled 86.1% of the global mobile operating system market in April 2020.
Around 37.93% of all devices connected to the internet worldwide run on Android. Android controlled 76.4% of the Chinese mobile phone market in April 2020.
Alphabet’s signature product is the Google search engine. Statista estimates Google had an 86.86% share of the global search market in July 2020.
Other Alphabet companies include advertising giant GoogleAds (formerly DoubleClick and Google AdWords), home products company Nest, GoogleMaps, Waze, and Waymo. Waymo is a market leader in self-driving vehicles.
Waymo has partnerships with Fiat-Chrysler (NYSE: FCA) and Volvo. Waymo has hundreds of autonomous vehicles on the roads. Waymo operates the ridesharing service Waymo One and a driverless truck company they call Waymo Via.
Waymo is one of many Alphabet research and development projects. Statista estimates Alphabet spent $26.018 billion on research and development efforts in 2019. Alphabet’s R&D ventures include Google Fiber, genetic data and testing company Verily Life Sciences, Google Brain, Calico, and the artificial intelligence company DeepMind.
DeepMind’s creations include AlphaZero; AlphaZero has taught itself to play some of the world’s most difficult games, including chess, Go, and Shogi (Japanese chess). AlphaZero has beaten grandmasters at those games.
Alphabet is a lucrative company. Alphabet reported quarterly revenues of $38.297 billion, a quarterly gross profit of $19.744 billion, and an operating income of $6.383 billion on June 30, 2020.
Alphabet is capable of growth. Alphabet’s revenues grew at a rate of 13.26% in the quarter ending on March 31, 2020. Stockrow estimates Alphabet’s revenue growth rate fell to -1.66% in the quarter ending on June 30, 2020.
Investors love Alphabet because it generates enormous amounts of cash. Alphabet reported a quarterly operating cash flow of $13.993 billion on June 30, 2020. Alphabet also reported a quarterly ending cash flow of -$1.902 billion that fell from $19.644 billion on March 31, 2020.
Alphabet had $121.08 billion in cash and short-term investments on June 30, 2020. Thus, Alphabet is a cash-rich company.
Many investors dislike Alphabet because its management refuses to pay a dividend. Instead, Alphabet follows Warren Buffet’s practice of reinvesting all its extra cash in the company.
Alphabet (GOOGL) is an expensive stock. Mr. Market paid $1,591.55 for Alphabet shares on October 26, 2020. I think Alphabet’s share price is justified by the enormous amounts of cash the company generates.
Alphabet faces serious threats include antitrust action in the United States. The US Justice Department and 11 American state governments filed an antitrust lawsuit against Alphabet on October 20, 2020.
Investors could make enormous amounts of money if courts break Alphabet up into several companies. Google, YouTube, Waymo, Nest, Google Ads, Android, Verily, and DeepMind could hold IPOs and create lucrative stocks.
The 1911 antitrust action that broke Standard Oil up created several lucrative energy companies, including Exxon-Mobil (XOM) and Chevron (NYSE: CVX). An Alphabet divesture could also create several moneymaking companies, including an independent YouTube.
3. Buy Snap Inc. Stock (NYSE: SNAP)
Snap Inc. (SNAP) is the owner of Snapchat, the most direct competitor to Instagram in the social media market.
Snapchat is an image-sharing app that is popular with young people in the United States.
Snapchat was the seventh-largest social-media platform globally, with 397 million active users in July 2020, Statista estimates.
Snap loses money, unlike Facebook (FB). Snap (SNAP) reported a quarterly common net loss of -$352.95 million on June 30, 2020.
Snap reported a quarterly operating loss of -$310.62 million on June 30, 2020. The quarterly operating loss grew from -$286.36 million on March 31, 2020, and -$253.60 million on December 31, 2019.
Snap has trouble generating cash. Snap reported a $350.38 million quarterly ending cash flow on June 30, 2020. The quarterly ending cash flow fell from $902.25 million on March 31, 2020, and rose from -$209.55 million on December 31. 2019.
Snap reported a $350.38 million quarterly ending cash flow on June 30, 2020. The quarterly ending cash flow fell from $902.25 million on March 31, 2020, and rose from -$209.55 million on December 31, 2019.
Snap can retain some cash / Snap had $2.830 billion in cash and short-term investments on June 30, 2020. Notably, Snap’s cash and short-term investments grew from $2.082 billion on March 31, 2020.
Bargain hunters like Snap because its shares are cheap. Mr. Market paid $41.27 for Snap Inc. (NYSE: SNAP).
I think Snap is a lousy stock despite the price because it makes no money. I cannot see how Snap can make money or compete with Facebook (FB) and TikTok.
4. Buy Shares in TikTok Global
The addictive video-sharing app TikTok is the fastest growing social media app globally, with over 800 million users worldwide in 2020.
Investors are interested in TikTok because it grew from no users in 2016 when they launched it to 800 million in 2020. Analysts attribute TikTok’s fast growth to its artificial-intelligence-powered algorithms.
Advertisers are interested in TikTok because it is addictive. Business of Apps estimates the average user spent 52 minutes on TikTok each day in 2019. Advertisers hope TikTok can reach younger viewers who ignore legacy media such as television.
You cannot buy stock in TikTok now because its owner ByteDance Ltd. is privately-held. It could be possible to buy stock in TikTok Global soon, however.
TikTok Global is a proposed American company that will own and operate TikTok’s North American and Australian assets. The current plan is for TikTok Global to be a publicly traded company based in Texas.
TikTok owner ByteDance is planning TikTok Global to stop U.S. President Donald J. Trump’s (R-Florida) attempt to ban TikTok in the United States. Trump threatened to ban TikTok in summer 2020 because he considers the app a security threat.
Trump fears TikTok’s algorithms could gather enormous amounts of data about ordinary Americans and transmit it to Chinese intelligence agencies. ByteDance Ltd. is based in the People’s Republic of China.
5. Buy Walmart or Oracle Stock
You can buy stock in two American companies that will own pieces of TikTok Global. Oracle (NYSE: ORC) will own 12.5% of TikTok Global, and Walmart (WMT) will own 7.5% of TikTok Global.
I think Walmart (NYSE: WMT) and Oracle (ORC) are good stocks. Oracle reported a quarterly operating income of $3.211 billion and a quarterly gross profit of $7.487 billion on August 31, 2020. Oracle reported quarterly revenues of $9.367 billion on August 31, 2020.
Oracle is a cash-rich company with $42.279 billion in cash and short-term investments on August 31, 2020. Oracle (ORC) paid a quarterly dividend of 24₵ on October 7, 2020. Oracle is also a cheap stock. Mr. Market was paying $57.53 for its shares on October 26, 2020.
I think Oracle can make money from TikTok Global because it will host TikTok’s American operations.
“Oracle will quickly deploy, rapidly scale, and operate TikTok systems in the Oracle Cloud,” said Oracle CEO Safra Catz in a press release. “We are 100% confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users.”
Oracle will get access to TikTok’s source code and updates in the TikTok Global deal, Bloomberg claims. I think Oracle could use TikTok’s source code to build its own social media apps.
Walmart is the world’s largest retailer, with 4,756 stores in the United States in 2020, Statista estimates. Walmart makes enormous amounts of money from those stores.
Walmart reported quarterly revenues of $137.742 billion, a quarterly gross profit of $35.053 billion, and a quarterly operating income of $6.059 billion.
Analysts think Walmart wants to use TikTok to market products to customers. Walmart could sell and ship products TikTok influencers promote. Walmart could also use TikTok’s algorithms to identify popular products and stock them.
A popular theory is that Walmart could link TikTok to its e-commerce platform Walmart.com. Walmart could popup apps on TikTok that take viewers straight to Walmart.com.
The Chinese version of TikTok, Douyin, uses live-streaming video conferences to market products, Vox notes. Vox writer Jason Del Rey thinks Walmart could bring such marketing efforts to North America through TikTok Global.
Walmart is a cheap stock when compared to Amazon (AMZN) and Alphabet (GOOG). Mr. Market paid $142.16 for its shares on October 26, 2020. I think Walmart is a good stock for ordinary people because it will pay a 54₵ quarterly dividend on January 4, 2021.
Facebook/Instagram Stock vs. Google/YouTube Stock
|Market Cap||$602 B||$829 B|
|Sales 1 Year||$43.9 B||$105 B|
|Earnings 1 Year||$17.9 B||$16.6 B|
|Earnings as % of Sales 1 Yr||40.7%||15.85%|
|EPS Change 1 Year||50.62%||-20.53%|
|Operating Cash Flow||$27 B||$39.2 B|
|P/E Ratio (forward)||26.88||26.53|
|% Change Revenue 1 Year||48.54%||18.86%|
|Stock Price Growth 1 Yr||41%||31%|
Table 1: Facebook vs. Google: 2018
Instagram Stock Summary
There is no Instagram stock, but investors can buy stock in Instagram’s owner, Facebook Inc. (Ticker: FB), or its competitors SnapChat, Tiktok, or Google. Investors need to be careful with social media because many social media companies such as Snapchat lose money. Always investigate social media stocks carefully before you invest in them.
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