Image Source: Instagram/Facebook

Facebook's (NASDAQ:FB) Instagram is on a roll. The photo-sharing social networking site recently announced that it has grown to 500 million monthly active users, or MAUs, 300 million of which use the service every day. Instagram's MAU figure still trails the 1.7 billion MAUs Facebook's site boasts, but its growth is increasingly becoming important to the company as an investment.

In September, Instagram announced the company had 400 million MAUs. With the recent disclosure, Instagram grew MAUs 25% in eight months, which puts the site on path for an annualized MAU growth rate of nearly 40%. Compared to Twitter (NYSE:TWTR), which increased its year-over-year MAU figure only 2.7% in the company's recently reported first-quarter results by reporting 310 million MAUs. As a comparison, Facebook's larger site added 15% MAUs in the last four quarters, which is impressive growth for a company at this scale, but not approaching the torrid rate of growth Instagram's producing.

It would appear the next large milestone for Instagram is doubling Twitter's MAU figure. If current trends continue, this event will occur within a year. However, on a daily active-user, or DAU, basis, Instagram has already doubled Twitter.

Analyst estimates point to less user engagement from Twitter users

Unlike Facebook and Instagram, Twitter does not report DAUs. But according to a group of analysts surveyed by Bloomberg, Twitter has "less than 140 million [daily] users." Compared to Instagram's 300 million figure, on any given day Instagram has more than two times the number of users Twitter does.

Another telling statistic is the percentage of MAUs that are also DAUs. In addition to being more engaged, the latter group offers the platform more chances to deliver advertising. For Instagram, 60%, or 300 million of 500 million, of monthly active users are also daily active users. Using Bloomberg's estimate of Twitter's DAUs, only 45% of its monthly active users are going to the social-media site. What this shows is Instagram is doing a better job of holding the attention of its monthly active users than Twitter.

Facebook should be more forthcoming with Instagram financials

Outside of the MAU and DAU figures, Facebook is mostly closed-lipped about Instagram's performance metrics. In its last quarterly report Facebook mentioned Instagram only six times, with the vast majority of references telling investors reported metrics do not include Instagram users. Facebook is required to report revenue from Instagram, but reports consolidated financials that obscure Instagram's contributions to Facebook's total results.

Facebook should reconsider its decision to not independently release Instagram financials. As a social-media site with 500 million MAUs, that's growing at 40% annualized clip, Instagram is quickly becoming a substantive part of Facebook's future growth. Breaking out these results in its quarterly reports would go a long way to show investors Instagram has a long growth runway and should increase valuation multiples.

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