How Instagram Could Have Cut a Better Deal – NYTimes.com

How Instagram Could Have Cut a Better Deal – NYTimes.com.

Nader-Nazemi-Instagram,Facebook-NaderNazemi

Mike Krieger, left, a co-founder of Instagram, and Shayne Sweeney, an engineer.

Never put all your eggs in one basket. Looks like Facebook it taking everyone else connected with it down. A sinking boat. Time to abandon it and admit that the company was over-hyped, over-valued. It is just myspace with some extra bells and whistles. But then again Instagram is extremely over-priced. Facebook was flush with cash and they bought the company on a whim. Sharing pictures is a fad. I will give it 6 months before people move on to some other new thing. 

In hindsight, perhaps Instagram should have cut a different deal with Facebook.
In April, Facebook agreed to acquire Instagram, the hot social media photo-sharing site, in a deal valued at the time at about $1 billion.
The problem is that Facebook did not agree to pay $1 billion in cash. The deal terms said Instagram would receive $300 million in cash and about 23 million shares of Facebook stock once the deal closed. Facebook stock at the time of the deal was valued by the parties at about $30 a share.
But since that time, Facebook’s initial public offering has taken place — and we all know what happened. Facebook shares have fallen substantially, and the Instagram acquisition is now valued at about $735 million. The Instagram founders are out almost $300 million, at least on paper.
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