- Instagram Stories revenue is being modeled to grow even faster than Facebook’s mobile revenues did in the early 2010s.
- The company is in the midst of a big shift to Stories-based sharing, and new financial estimates from Nomura are a vote of confidence in its success.
- Instagram Stories may pull in $7.5 billion in revenue for Facebook in 2021, according to the investment firm.
Mark Zuckerberg is gambling that the future of sharing on Facebook lies in ephemeral, auto-deleting photos — and it sounds like the bet is already starting to pay off.
Over the last year or so, Facebook has leaned heavily into "Stories": A sharing format stolen from Snapchat that lets users post photos and videos that auto-delete after a day. A new research note from Nomura analyst Mark Kelley suggests that the shift away from the traditional, scandal-ridden News Feed is going even faster than expected, and is analogous to Facebook’s shift to mobile in the early part of the decade that ultimately saw profits boom.
"The transition to Stories is occurring at a much faste rate than we initially anticipated," Kelley wrote, even as "core Facebook user trends have surprised us to the upside." He estimates Instagram Stories alone brought in $750 million in advertising revenue in 2018 — and is predicting $2.2 billion for 2019, and $7.5 billion in 2021.
If Nomura’s numbers prove accurate, the compound annual growth rate of revenue for Instagram Stories over the next few years will be even greater than that of Facebook’s mobile revenue between 2013 and 2016.
Kelley added: "We’ve also heard anecdotally from advertisers that budgets continue to grow at the corporate level, with spend being reallocated to Stories rather than Feed, and early feedback has been positive."
The vote of confidence will be a welcome piece of good news from Facebook, which has faced a difficult two years from a public relations perspective. It has lurched from scandal to scandal — one month being implicated in the spread of hate speech that fueled genocide in Myanmar, the next admitting a hack of tens of millions of users’ sensitive data.
But Nomura suggests that Facebook is now at a point of scandal fatigue, with crises failing to do much damage: "On the whole, we do think the negative headwinds have largely been exhausted, with little reaction to negative press as of yet."
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