Thursday was a big day for Facebook (FB +1.45%) and LeBron James. Earlier in the day, the social-media network operator announced that it was giving Instagram users the ability to upload video clips as long as 15 seconds to its fast-growing Instagram photo-sharing website. Later that night, James helped power the Miami Heat to its second consecutive NBA championship.
The fun didn't end there for either party. A few hours after clinching the NBA Finals victory -- repeating as MVP -- James uploaded a short video to Instagram's new platform. The playful yet expletive-saddled rant has naturally gone viral. As for Saturday morning, more than 373,000 Instagram users have shared the clip and another 42,000 people have commented on it.
Facebook couldn't have timed this any better. The stock failed to move higher on Thursday's announcement. It was a down day for the market, but investors failed to see this as anything else than an attempt by Facebook to drum up a response to Twitter's popular Vine platform that allows for six-second videos.
Now with a single viral upload on Friday, a lot of people now know that Instagram isn't just a place for snapshots.
Celebrities have a funny way of lifting a platform's visibility. Twitter was doing fine as a place for tech-forward folks to share short messages, but it really took off once entertainers took to pecking out 140-character missives. The same scenario played out in China with SINA's (SINA +0.00%) Weibo. The moment top athletes, rockers, and movie stars took to Weibo, it became the undisputed micro-blog of choice for the world's most populous nation.
At the peak of Linsanity, Jeremy Lin's Weibo account amassed millions of followers. Even some Western celebrities who don't have Twitter accounts have popular Weibo feeds. MediaBistro.com points out that Robert Downey Jr. is on Weibo but not on Twitter.
In short, don't underestimate Instagram's chances here. The site that had just 20 million active users when Facebook snapped it up early last year is now up to 130 million shutterbugs. A whopping 16 billion photos have been uploaded to the site, and now it's time to see whether short video clips will take Instagram to an even higher level or whether this will alienate its growing base.
It would be a bad idea to bet against Facebook. On Friday, UBS upgraded the stock to "buy" -- bumping its price target to $30 -- partly on the prospects of selling ads against the short videos. UBS expects Facebook to start slapping video ads on the clips during the latter half of this year, and if users accept the monetization, it could easily create millions in incremental annual revenue for Facebook.
Facebook shareholders who continue to see their stock trade well below last year's $38 IPO would love that. Why wait? Now the bulls can always take to Instagram with their own brief rants against the haters.
