Analysts Critique Impact Of Instagram Founders Departure

Analysts and industry insiders are struggling to make sense of Kevin Systrom and Mike Krieger’s seemingly abrupt decision to depart Instagram.

While the circumstances surrounding their imminent exits remain largely unknown, the general consensus is their loss is bad news for Instagram and Facebook.

“It’s negative that they won’t be there, as it seems like many of the successes of Instagram in recent years are due to their presence,” Brian Wieser, senior research analyst at Pivotal Research Group, said on Tuesday.

Qualifying his reaction, Wieser added: “The company was generally integrated into Facebook in most ways. So it’s not likely there will be any near-term downside to this.” 

J.P. Morgan analyst Doug Anmuth wasn’t quite so optimistic about the loss of Instagram’s cofounders, and its short-term impact on Facebook.

“We look for additional color in coming days and weeks, but in the near-term, we expect [Facebook] shares to come under meaningful pressure from the departures,” Anmuth said in a note to investors.

Of course, Instagram’s impact on Facebook’s bottom line and relevance among young consumers can’t be overestimated.

“We believe Instagram has been a strong growth driver for [Facebook] and has played a critical role in retaining younger users within the group of [Facebook] platforms and in competing with Snap,” Anmuth said.

Yuval Ben-Itzhak, CEO of Socialbakers, was among those taking the news in stride.

“The departure of the Instagram founders is just a continuation of a trend that we see all across tech. Founders move on to new projects and leave their baby to thrive in the hands of the acquirer,” Ben-Itzhak said on Tuesday. “This in itself doesn’t yield any great need for concern.”

Regardless of the cofounders motives, others admitted the double defection is not a good luck sign for Instagram and its parent company.

“Whether this is simply a natural progression of founders exiting after a large buyout, or if this is part of something much bigger, it looks bad for Facebook,” said Vic Drabicky, founder-CEO of January Digital. “In a year where Facebook already has so much negative press, this is the last thing it wants to be dealing with.”

“From a marketing perspective, it doesn’t immediately change much of anything; Facebook and Instagram are still by far the leaders in the space,” Drabicky added. “But for those who are opportunistic -- Amazon or even Google -- this could appear to be Facebook cracking open the door ever so slightly more for someone to come in and take their market share.”

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