Facebook is a social utility that connects people with friends and others who work, study and live around them.
Instagram Is Now Worth Just $738 Million
When Facebook announced the acquisition of Instagram for just over $1 billion, the deal sent collective shock across the tech landscape. At the time of the announcement, the deal was based on a $300 million cash pay-out plus 22,999,412 Facebook shares valued at $38 apiece.
Things haven’t gone to plan. The biggest snag being of course, the fact that the Facebook share is now trading below $20. In fact, things started to go wrong from the day of the Facebook IPO. The fact that shortly after going public the stock price fell to $29.42 meant that early on the Instagram deal fell below the $1 billion mark.
As at this writing the Facebook Instagram deal is worth just $738 million; Facebook shares are trading at $19.05 and naturally if they drop lower, the value of Instagram will follow suit. In little over 3 months the deal has dropped a whopping 41.88% in value and this is not good news for either companies.
There’s even talk now that Mark Zuckerberg is not the right fit for leadership of Facebook and some are calling for his head. If the Facebook stock price tumbles any lower, I dare say he may find his role at Facebook diminished.
For now all Facebook investors can do is hope that things turn round. Anything else will be an absolute and utter disaster.