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Instagram: Facebook's Next Big Money Maker

Last quarter, Facebook generated 41% of its $1.6 billion in advertising revenue during the second quarter, up 61% from a year earlier. For the entire quarter, Facebook had $1.813 billion in revenue.

For 2015, Sandler believes that Facebook could generate $8.2 billion in revenue, assuming 12% growth in monthly active users (MAU), and a 5% growth in effective cost per thousand impressions (eCPM) for smartphone markets, and 40% growth in MAUs and 25% growth in eCPM in emerging markets. When tacking on the additional $1.8 billion in revenue from Instagram, Facebook could have as much as $10 billion in revenue for 2015, up from $7.36 billion in 2013, according to estimates from Yahoo! Finance.

Coupled with the pending inclusion in the S&P 500, and the potential of Instagram as Facebook's next big money maker, Facebook shares may have much more room to run.

"In short, while a good portion of alpha has been generated already for FB longs, we see upside to $62 based on upward estimate revisions and S+P 500 inclusion," Sandler said.

-- Written by Chris Ciaccia in New York

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