A couple weeks before the Facebook (NASDAQ:FB) IPO, CEO and co-founder Mark Zuckerberg shelled out $1 billion for Instagram. But now there’s another interesting development: The company has launched its own knock-off of the popular photo-sharing site.
It’s called Camera and is now available from Apple’s (NASDAQ:AAPL) app store. With a couple taps, users can easily edit and share photos. And like Instagram, Camera has filters to change the style and colors of pictures.
OK, so why did Zuckerberg buy Instagram? It may really be a defensive move. Why allow a rival like Twitter, Microsoft (NASDAQ:MSFT) or even Apple buy it? Buying Instagram should allow Facebook to protect is hugely important photo-sharing franchise, which averages about 300 million uploads per day.
However, Facebook will still need to figure out how to make money on mobile, and photo-sharing makes this extremely difficult. After all, users want most of the screen for viewing their photos, not ads. Besides, it seems highly unlikely they’ll pay a fee, either.
Until Facebook has a good answer to the monetization issue, it’s going to be difficult for the stock to get much traction — especially when the valuation is still frothy, at about 22 times revenues.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.