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Facebook Just Acquired GIPHY

By Evan Niu, CFA – May 16, 2020 at 11:00AM

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This is the social networking giant's fifth-largest acquisition to date.

Yesterday, social media giant Facebook (META -0.40%) announced that it had acquired GIPHY, one of the leading online repositories for GIFs, which are short looping videos that social media users use to express themselves. The plan is to integrate GIPHY directly into Facebook's Instagram team while incorporating it more deeply into Facebook's other apps. Facebook already represented about half of GIPHY's engagement, according to product exec Vishal Shah.

"A lot of people in our community already know and love GIPHY," Shah wrote in a blog post announcing the deal. "In fact, 50% of GIPHY's traffic comes from the Facebook family of apps, half of that from Instagram alone." Instagram chief Adam Mosseri also celebrated the deal on social media.

GIPHY is Facebook's fifth-largest acquisition

Facebook did not disclose financial terms, but the price tag is rumored to be in the ballpark of $300 million to $400 million, according to reports from The Information and Axios. The deal was first reported by Axios and Facebook subsequently confirmed the purchase in a blog post. Facebook had approached GIPHY prior to the COVID-19 pandemic to discuss a deeper partnership before those talks evolved into an acquisition, according to Axios.

Instagram Stories interface displayed on three smartphones

Facebook will integrate GIPHY into Instagram Stories. Image source: Instagram.

The reported price represents a substantial drop from GIPHY's last private valuation of $600 million in late 2016. The start-up had raised a total of approximately $150 million in private markets, according to Crunchbase. GIPHY will be Facebook's fifth-largest acquisition to date, behind the 2014 purchase of LiveRail for an estimated $400 million to $500 million.

Acquired Company

Date

Price

WhatsApp

February 2014

$21.8 billion 

Oculus

March 2014

$2 billion 

Instagram

April 2012

$715 million 

LiveRail

July 2014

$400 million to $500 million

GIPHY

May 2020

$300 million to $400 million

Data sources: Facebook, SEC filings, and media reports.

While not an outright acquisition, Facebook last month announced it was investing a massive $5.7 billion in Jio, one of India's largest conglomerates.

GIPHY operated for many years generating precisely $0 in revenue, since it's difficult to monetize a GIF library directly from consumers. The company then pivoted to brand sponsorships and ad products for marketers (like custom GIFs) as a way to generate revenue. It's unclear how successful those efforts have been, and it's unlikely Facebook will share any details.

The start-up also offers developer tools that allow other tech platforms -- including Twitter, Slack, and Apple iMessage, among others -- to integrate the catalog. Facebook says any developer partners will still maintain access to those tools and GIFs.

The deal will also likely intensify the ongoing antitrust scrutiny surrounding Facebook, which has garnered criticism due to its overwhelming market power.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple and Facebook. The Motley Fool owns shares of and recommends Apple, Facebook, Slack Technologies, and Twitter. The Motley Fool has a disclosure policy.

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