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Shares in Facebook (FB) Jump on News of Instagram Ads

By  +Follow October 4, 2013 5:31AM
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Shares in social media giant Facebook (FB) spiked Friday on news that it would start selling ads on the photo-sharing service Instagram. News that Facebook would begin monetizing their $1 billion acquisition from last year pushed shares up almost 3.5 percent.

Instagram to Ease Users In

Instagram assured users in a blog posting that it would make efforts to prevent the new ads from interrupting their users’ current experience.

“Our aim is to make any advertisements you see feel as natural to Instagram as the photos and videos many of you already enjoy from your favorite brands,” Instagram said on the blog. “After all, our team doesn’t just build Instagram, we use it each and every day. We want these ads to be enjoyable and creative in much the same way you see engaging, high-quality ads when you flip through your favorite magazine.”

”Seeing photos and videos from brands you don’t follow will be new, so we’ll start slow. We’ll focus on delivering a small number of beautiful, high-quality photos and videos from a handful of brands that are already great members of the Instagram community,” the blog post continued.

The $1 billion deal to purchase Instagram in April of last year appeared peculiar to many at the time, coming as Facebook was ramping up for its IPO and appearing to buy a steep premium on the small company’s value. However, the long-term strategy may appear clearer after today’s announcement.

Mobile Presence a Focus With Pending Twitter (TWTR) IPO

Many analysts believe the push to increase ad revenues through Instagram is a positive move for Facebook.

“There just continues to be momentum, continues to be good news,” said Benjamin Schachter, an analyst at Macquarie Securities USA Inc. “Even though the Instagram news was somewhat expected over time -- we’ve been waiting for the announcement this year, and yeah, it’s going to be a positive.”

The move comes one day after Twitter ($TWTR) opened its confidential IPO. News outlets have compared the two companies, with a particular focus on mobile ad revenues, noting that 65 percent of Twitter’s ad revenue was coming from mobile as compared to just 41 percent of Facebook’s. As more and more users shift to mobile, Facebook’s ability to monetize ads in that area is believed to be crucial, and Instagram could ultimately prove to be an essential piece of that puzzle.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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G. T. HALL
21 Aug 14 16:43:49
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Wall Street Monitor
21 Aug 14 16:35:37
$FB: US parents keep photos of kids off Facebook Inc http://t.co/DfoLNF7i72 http://t.co/DAGYLhnf17
Stock Wire
21 Aug 14 16:34:54
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21 Aug 14 16:24:57
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Market Updates
21 Aug 14 16:18:41
$FB: US STOCKS-Wall St flat as Caterpillar offsets Facebook http://t.co/1JHsHvHmX8 http://t.co/3sGyGsKsEx
Trevor G
21 Aug 14 16:15:47
@cometkarov what's your opinion on $TWTR and $FB into October earnings? I'm betting both are at new highs. Looking for dip to load.
Colin Macleod
21 Aug 14 16:14:26
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21 Aug 14 16:10:01
RT @DeidreZune: Yellen slated to speak at 10 AM EDT 7 AM PDT Draghi speaks @ 2 PM EDT 11 AM PDT #FED #FOMC $SPX $TLT $AAPL $GOOGL $FB $GIL…
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21 Aug 14 16:03:52
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21 Aug 14 15:56:20
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21 Aug 14 15:46:27
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21 Aug 14 15:35:02
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Carolyn Boroden
21 Aug 14 15:27:38
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21 Aug 14 15:24:02
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21 Aug 14 15:21:07
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21 Aug 14 15:20:27
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21 Aug 14 15:18:40
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Miriam Franklin
21 Aug 14 15:14:35
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ALEX
21 Aug 14 15:11:49
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Leilani Pips
21 Aug 14 15:04:24
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Mike M.
21 Aug 14 15:01:25
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Stock Signaling
21 Aug 14 15:01:14
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The Stoic Speculator
21 Aug 14 14:45:38
$FB cup and handle on weekly? Any thoughts from the O'Neill/IBD/technician crowd?
Yigger
21 Aug 14 14:37:02
RT @optionvoyeur: Yiggers bought $FB IPO at $40 Sold at $17 now waiting to buy back in at $85
The Stoic Speculator
21 Aug 14 14:35:35
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A COMPLACENT TRADER
21 Aug 14 14:35:27
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Investors Hangout
21 Aug 14 14:32:21
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Trevor G
21 Aug 14 14:30:45
@fazoinnorcal @PipsToDollars @FundsOverFun $FB 84 in October.
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21 Aug 14 14:29:34
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21 Aug 14 14:26:42
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21 Aug 14 14:24:12
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By  +Follow October 4, 2013 5:31AM
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