Facebook buys Instagram for $1 billion in cash and stock

“Not since Google bought YouTube has an acquisition grabbed the world’s attention the way Facebook’s $1-billion deal to buy Instagram,” Jessica Guynn reports for The New York Times. “And it’s bound to get tongues wagging again about startup valuations shooting into the stratosphere.”

“‘It’s unprecedented on almost any metric you look at,’ said Paul Kedrosky, a senior fellow at the Kauffman Foundation. The San Francisco startup has just 13 employees. That works out to be $76 million per employee, Kedrosky pointed out,” Guynn reports. “At the same time, Instagram had no business model, no revenue. ‘That’s going to make some people’s eyes roll back in their heads and connect to their ears,’ Kedrosky said.”

Guynn reports, “Instagram may not have given Facebook a run for its money, but it was sure giving Facebook a run for its popularity, and on the most important platform of all: mobile… Which is why Facebook did the deal in the midst of its federally required quiet period, mucking up what had so far been a very orderly and neat march toward a $100-billion initial public stock offering… ‘Getting it done beats losing Instagram to a competitor,’ Kedrosky said.”

Read more in the full article here.

[Thanks to MacDailyNews Readers “Fred Mertz,” “Lynn Weiler,” and “FabFab” for the heads up.]

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