If you follow social media, you've likely heard Twitter (TWTR) co-founder and board Chairman Evan Williams' recent slamming of Facebook (META -0.43%) in general, and Instagram in particular. At the core of Williams' frustration were all the good tidings directed toward Facebook's photo- and video-sharing service when it announced it had surpassed 300 million monthly average users, or MAUs, in the third quarter, compared to Twitter's 284 million. That was no small feat, particularly when you consider Instagram stood at 200 million MAUs just nine months earlier.

As Williams pointed out, "Twitter makes a hell of a lot more money than Instagram, if that's what Wall Street cares about." Of course, Wall Street and investors do care about earnings, which brings us back to Facebook, Instagram, and 2015. As Williams correctly stated, Instagram doesn't make much revenue, but a recent report suggests that will change beginning in 2015 -- and the impact could be enormous.

The world according to Instagram
Facebook has no shortage of revenue opportunities going forward; its multiple acquisitions earlier this year makes that abundantly clear. WhatsApp is nearing a billion monthly average users, Facebook Messenger has surpassed 500 million MAUs, the Oculus Rift virtual reality solution is being prepped for widespread release, and video ads should begin boosting revenues before long.

But outside of Facebook implementing video spots across its platform in the coming year, in the near term Instagram offers the most bang for the buck. In fact one analyst said this month that Instagram is already a $35 billion entity unto itself, based on future earnings, nearly doubling an earlier estimate valuing the picture-sharing behemoth at a "mere" $19 billion.

It would not be surprising if investors pooh-poohed Instagram's valuation as inordinately high. After all, Instagram isn't contributing much revenue for Facebook yet, and as Williams made abundantly clear, Twitter is at least growing its top line. But before investors brush Instagram's valuation estimate aside, a couple things are worth considering.

The case for Instagram
The Citigroup analyst responsible for the valuation suggests Instagram could generate $2.7 billion in annual, high-margin revenue right now if it applied itself. By comparison, Twitter's trailing 12-month revenue total is just shy of $1.2 billion, and the company is currently valued at $24 billion. Granted, Twitter is likely to continue boosting its top line, but these numbers make for an intriguing argument for Instagram.

Another analyst said Facebook could "sneeze and create a $100-million-per-quarter-revenue business" from Instagram. Just imagine when CEO Mark Zuckerberg and team put a concerted effort into Instagram. Suddenly, the $2.7 billion in revenue this year the Citi analyst expects doesn't sound so far-fetched. Regarding margins, Facebook has an existing infrastructure, strong lineup of marketing partners, and video advertising ready to be cut loose, all of which will make it easier to "flip the switch" to monetize Instagram.

Now consider Facebook itself and its 1.35 billion MAUs. In the trailing 12 months, Facebook generated about $11.2 billion in revenue, which equates to approximately $8.50 for each MAU. Applying those same figures to Instagram's 300 million MAUs results in an estimated $2.55 billion in annual revenue, just slightly below Citi's expectation for this year.

As I have noted in prior articles, Instagram should start paying off in 2015, and that sentiment is backed by Citi's valuation estimate. If Instagram's sales expectations for 2015 are even close to expectation, Facebook investors can look forward to another banner year.