SAN DIEGO, CALIF. (TheStreet) -- The law of truly large numbers seems to apply to Facebook (FB) -owned photo social network Instagram, which announced last week that it has 300 million active users. The milestone member number makes Instagram worth -- wait for it -- $35 billion, according to Citi Research.
"Using what we believe to be conservative assumptions around user growth and monetization, we believe Instagram is worth $35 billion -- up from the $19 billion we had previously estimated due to faster growth in its audience as well as continued monetization gains by social media properties," Citi analyst Mark May wrote in the firm's Friday note on Facebook. "As such, we are increasing our price target for FB from $86 to $91."
News that Instagram is now bigger than Twitter (TWTR) , which closed the September quarter with 284 million active users, has been reverberating through tech and finance circles since the Dec. 10 announcement, climaxing on Friday with Citi's $35 billion conclusion. May believes Instagram could contribute $2 billion in high-margin revenue to Facebook if the social network was to boost its advertising efforts to full capacity. Instagram has been running ads for a little more than a year, though it takes a completely hands-on approach and still works with a select base of customers.
Facebook shares were trading up 1.5% at $79.56 on Friday afternoon thanks to the bullish report. Twitter shares, around even for the day at $36.72 by Friday afternoon, were unscathed by the rather unflattering comparison -- Twitter's market cap is hovering around $23 billion -- but the stock is on a trajectory to finish down more than 3.5% for the week.