How To Buy Instagram Stock: Instagram has a healthy following. People use the social media platform to share photos and connect with people around the world. They watch Instagram Stories and user videos as well as message through the app. The visual nature of the platform is compelling and interest in the app has grown considerably over the years.
The question is: Does interest in Instagram make it an attractive stock?
To Buy Instagram, Buy Facebook
The first thing you need to know is that Instagram is not a stand-alone company. Facebook [NASDAQ: FB] owns it, so to invest in Instagram, you need to buy stock in Facebook.
This means you will also share in the future of its namesake social media platform as well as Messenger, WhatsApp, and Oculus.
Social media as an industry is heavily saturated and faddish. Trends are everything and the barriers to users switching platforms is minimal.
Is Instagram Stock a Buy?
Instagram is a powerful social media platform and it attracts a large number of users. Through 2019, Instagram use grew to 37% of adults in the US from 35%. The number of users around the world is currently around 1 billion.
Furthermore, Instagram’s popularity is on the rise. Instagram is most popular amongst millennials and younger. That statistic is astronomical. It is roughly three times the number of people who use Twitter. Facebook’s other offerings are also strong. Facebook has over 2.4 billion users, WhatsApp has 1.6 billion, and Messenger has 1.3 billion.
Instagram is extremely compelling to advertisers – which is one of the chief ways that it makes money. Within Instagram, the split between male and female users is mostly even and they aren’t just empty accounts.
Some 60% of Instagram users log in every single day and another 21% log in at least once a week. Instagram is the most frequently used social media platform after Facebook. Users spend an average of 53 minutes per day, scrolling through their image feeds.
Roughly 90% of these Instagram users follow at least one business and their posts are encouraged. A survey of Instagram users revealed that 78% of respondents like seeing brands on the social media platform and 72% look at brands as building a sense of community.
Instagram also supports influencer marketing. In fact, almost 90% of people say that Instagram is vital to influencer marketing.
These are the ads that feature a regular individual using a product and sharing that fact to their followers. Companies like working with influencers because it allows them to spread news and knowledge of their product or company through a trusted outlet whereas a paid ad can sometimes be ignored.
What to Know Before Buying Instagram
Before buying stock in Instagram, make sure you understand the risks of investing in a social media stock.
That industry is entirely based on user engagement. If users are not engaging with ads, signing on regularly, spending significant amounts of time on the app, or otherwise doing things that cause them to engage with companies, no one is going to want to advertise there.
Also, it may not be a simple matter of attracting users and engagement. In social media, technology and features matter just as much as being part of an online community.
If a new app offered higher levels of engagement, many advertisers would jump ship or at least divert a considerable portion of their marketing dollars towards that new offering.
The problem here is that even a relatively small number of advertisers lost could have a negative impact on the company. Instagram could see reduced earnings, or its stock price could become depressed as investors react to a news story that highlights the lower number of advertising revenue received.
Furthermore, remember that Facebook owns Instagram, so you need to consider the fate of the company as a whole. Facebook has been under the gun, both societally and by governments.
There is pressure on the company to limit content or prohibit access to the platform altogether. There are issues relating to how Facebook uses the information it collects.
Security breaches could also come into play. All it takes is the right amount of unfavorable media coverage to sway a number of users to not use the Facebook suite of products or use them less, and the company could take a hit. In the case of Instagram, this means that if everyone stops using Facebook and starts using Instagram, the stock will still take a hit because of the impact of advertisers and investors.
Open a Brokerage Account
If you decide you would like to buy Instagram stock, your first step is going to be to open a brokerage account if you do not already have one. This is how you will buy your stocks. You may also be able to purchase other investments depending on your account type and where you go.
For instance, some brokerages allow you to invest in options, CDs, or currency. Most people choose to open an online brokerage account. You may have seen an ad for tastyworks, E*TRADE, TD Ameritrade, or Merrill Edge; these are examples of online brokerages.
The process itself is very simple. You just open the account and set up a funds transfer from your bank. It takes minutes.
The brokerage you choose will have different requirements. You may need to have a minimum deposit to open an account. In some cases, you may also receive certain advantages from opening an account if you deposit a specific amount, so pay attention to any special offers.
Also, think about whether you want a cash account, or you want to invest on margin – this means that you could borrow money from the brokerage to make larger trades.
You may be able to leverage your investment and play with the house’s money to earn a higher return but if you make a bad call, you have a larger downside.
Place a Buy Instagram Stock Order
Once you have a brokerage account, you would need to place a stock order. There are two ways to do this. You can get a market order. This lets you buy the stock at its current price.
The snag here is that you get the price of the stock at the time that your transaction is processed. This could be very different from the price the stock is showing when you initiate the transaction.
You can also buy a limit order. This lets you buy the stock at a specific price. The transaction will only process if shares are available at that price.
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