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Facebook Paid $715 Million for Instagram

By - Source: The Next Web | B 8 comments

A little less than the rumored billion.

Earlier this year, Facebook announced that it had acquired popular photo-sharing service Instagram. Though the company didn't reveal the financial details of the deal, the rumored price was a billion dollars in cash and stocks. Today, the company finally spilled the beans on just how much it will drop on the acquisition.

The Next Web points to a 10-Q filing with the SEC that reveals the deal for Instagram was $300 million in cash and 22,999,412 shares. In the run up to Facebook's hotly-anticipated IPO, this put the value of the deal was put at a cool billion. However, as we all know, things haven't exactly been smooth sailing for Facebook since its initial public offering. Because Facebook shares have fallen, so too the price Facebook will pay for Instagram.

According to TNW's Alex Wilhelm, the price of 12 million vested shares of Class B common stock for "non-employee stockholders" and 11 million un-vested shares for Instagram employees comes to an "aggregate fair value of $194 million." Throw in the $300 million in cash and the total for the deal is $715 million.

Along with Instagram, Facebook also runs its own photo app called Facebook Camera. The application is designed to make capturing and sharing photos with your Facebook friends even easier and, like Instagram, there's a bunch of different filters and editing tools to jazz up your pictures before uploading them.

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  • 6 Hide
    dxwarlock , October 25, 2012 8:07 PM
    Even if the stock value was $0 now compared to when they got it $300 million was too much to pay for it.

    I mean really..3/4 of a BILLION dollars, for a photo website?
  • 2 Hide
    metro2003 , October 25, 2012 8:14 PM
    I don't get it. $194 + $300 = $494. what happened to the rest up to $715. Someone's walking around with $221 in their pocked !
  • 2 Hide
    anti-painkilla , October 25, 2012 8:16 PM
    ^ Word right out of my mouth. Why would anyone do this?
  • 4 Hide
    anti-painkilla , October 25, 2012 8:19 PM
    http://www.computerworld.com/s/article/9232878/Facebook_s_price_tag_for_Instagram_drops_to_715M

    Seems the 11M shares come to $194M. But a total of 23M shares plus the $300M cash come to $715M. I think that sentence needs editing so it is not misread.
  • -3 Hide
    ddpruitt , October 25, 2012 10:11 PM
    So they didn't actually pay $715 million for instagram, they paid $300 mil. They also gave them stock, something Facebook didn't buy, pay for, or have to work for.

    I love how business types create money out of thin air, no wonder the economy's in trouble.
  • 1 Hide
    webbwbb , October 26, 2012 12:21 AM
    ddpruittSo they didn't actually pay $715 million for instagram, they paid $300 mil. They also gave them stock, something Facebook didn't buy, pay for, or have to work for. I love how business types create money out of thin air, no wonder the economy's in trouble.

    They had to work quite hard for it actually. That is giving them ownership of a portion of Facebook. Its like saying that if someone gave you land and materials to build a house and you went through the whole process of building it, then sold it, that you were making money out of thin air without working for it.
  • -1 Hide
    Alphi , October 26, 2012 12:54 AM
    Quote:
    Its like saying that if someone gave you land and materials to build a house and you went through the whole process of building it, then sold it, that you were making money out of thin air without working for it.


    that's not how it works at all.. stock deals aren't taking any stock away from anyone they just print more stock i.e. make more stock out of thin air.

    its like saying "hey everyone grab a hand full of dirt and throw it in the ocean.. ah now we've made more land that we can give to this guy"

    each persons land dimensions remain the same.. they are all just devalued slightly because they took some dirt away from it to make new land.

  • 0 Hide
    ddpruitt , October 26, 2012 2:28 AM
    webbwbbThey had to work quite hard for it actually. That is giving them ownership of a portion of Facebook. Its like saying that if someone gave you land and materials to build a house and you went through the whole process of building it, then sold it, that you were making money out of thin air without working for it.


    To use your house analogy it's like me spending $100 mil buying land (IP) and building a suburb (website). Then I loan you a house (stock) so you can do some work for me (Instagram). Then I say I paid you $500 million because that's how much the house is worth. See the problem now?

    In fact it makes even less sense because the amount paid varies depending on the day, season, mood of the shaman etc.
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