Facebook shares slip after Instagram founders quit

Sept 25 (Reuters) - Shares of Facebook Inc fell more than 2 percent in early trading on Tuesday after the two founders of photo-sharing app Instagram left the social networking giant under unexplained circumstances.

Analysts said the departure of Kevin Systrom and Mike Krieger may have been the result of friction with Chief Executive Officer Mark Zuckerberg over how Facebook's fastest-growing revenue generator is run.

"Our sense is the duo may have wanted to run Instagram more independently than their parent company wanted," said Scott Kessler, an analyst at research firm CFRA.

Instagram co-founder Kevin Systrom:

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Instagram co-founder Kevin Systrom
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Instagram co-founder Kevin Systrom
Instagram Chief Executive Officer and co-founder Kevin Systrom smiles during the launch of a new service named Instagram Direct in New York December 12, 2013. Photo-sharing service Instagram unveiled a new feature on Thursday to let people send images and messages privately, as the Facebook-owned company seeks to bolster its appeal among younger consumers who are increasingly using mobile messaging applications. The new Instagram Direct feature allows users to send a photo or video to a single person or up to 15 people, and have a real-time text conversations. REUTERS/Lucas Jackson (UNITED STATES - Tags: SCIENCE TECHNOLOGY BUSINESS PROFILE HEADSHOT LOGO)
Instagram co-founder and CEO Kevin Systrom, speaks during a Q&A session at LeWeb 2012 in London June 19, 2012. REUTERS/Luke MacGregor (BRITAIN - Tags: BUSINESS)
Instagram co-founder and CEO Kevin Systrom, speaks during a Q&A session at LeWeb 2012 in London June 19, 2012. REUTERS/Luke MacGregor (BRITAIN - Tags: BUSINESS)
Kevin Systrom, Chief Executive of Instagram, the popular photo-sharing app now owned by Facebook, displays his photo on a mobile phone during an interview with Reuters December 4, 2012 at the LeWeb technology conference in Aubervilliers, near Paris. Picture taken December 4, 2012 REUTERS/Philippe Wojazer (FRANCE - Tags: BUSINESS TELECOMS)
Instagram Chief Executive Officer and co-founder Kevin Systrom announces the launch of a new service named Instagram Direct in New York December 12, 2013. Photo-sharing service Instagram unveiled a new feature on Thursday to let people send images and messages privately, as the Facebook-owned company seeks to bolster its appeal among younger consumers who are increasingly using mobile messaging applications. The new Instagram Direct feature allows users to send a photo or video to a single person or up to 15 people, and have a real-time text conversations. REUTERS/Lucas Jackson (UNITED STATES - Tags: SCIENCE TECHNOLOGY BUSINESS)
Instagram Chief Executive Officer and co-founder Kevin Systrom speaks during the launch of a new service named Instagram Direct in New York December 12, 2013. Photo-sharing service Instagram unveiled a new feature on Thursday to let people send images and messages privately, as the Facebook-owned company seeks to bolster its appeal among younger consumers who are increasingly using mobile messaging applications. The new Instagram Direct feature allows users to send a photo or video to a single person or up to 15 people, and have a real-time text conversations. REUTERS/Lucas Jackson (UNITED STATES - Tags: SCIENCE TECHNOLOGY BUSINESS)
Instagram Chief Executive Officer and co-founder Kevin Systrom announces the launch of a new service named Instagram Direct in New York December 12, 2013. Photo-sharing service Instagram unveiled a new feature on Thursday to let people send images and messages privately, as the Facebook-owned company seeks to bolster its appeal among younger consumers who are increasingly using mobile messaging applications. The new Instagram Direct feature allows users to send a photo or video to a single person or up to 15 people, and have a real-time text conversations. REUTERS/Lucas Jackson (UNITED STATES - Tags: SCIENCE TECHNOLOGY BUSINESS PROFILE HEADSHOT LOGO)
Instagram founder and CEO Kevin Systrom and wife Nicole Schuetz arrive at the Metropolitan Museum of Art Costume Institute Gala (Met Gala) to celebrate the opening of "Manus x Machina: Fashion in an Age of Technology" in the Manhattan borough of New York, May 2, 2016. REUTERS/Lucas Jackson
Pope Francis shakes hands with co�?founder and CEO of Instagram Kevin Systrom during a meeting at the Vatican, February 26, 2016. REUTERS/Osservatore Romano/Handout via Reuters ATTENTION EDITORS - THIS PICTURE WAS PROVIDED BY A THIRD PARTY. REUTERS IS UNABLE TO INDEPENDENTLY VERIFY THE AUTHENTICITY, CONTENT, LOCATION OR DATE OF THIS IMAGE. EDITORIAL USE ONLY. NOT FOR SALE FOR MARKETING OR ADVERTISING CAMPAIGNS. THIS PICTURE IS DISTRIBUTED EXACTLY AS RECEIVED BY REUTERS, AS A SERVICE TO CLIENTS.
Instagram Chief Executive Kevin Systrom answers a question at a news conference, as L-R: social media star Bryce Xavier, Instagram Product Manager Ashley Yuki and social media star Lele Pons look on, in San Francisco, California, U.S., June 20, 2018. REUTERS/David Ingram
MOUNTAIN VIEW, CA - DECEMBER 03: Presenter Kevin Systrom (L), award winner Dr. Joanne Chory and presenter Kara McCullough (R) pose for photos after award ceremony at the 2018 Breakthrough Prize at NASA Ames Research Center on December 3, 2017 in Mountain View, California. (Photo by Miikka Skaffari/Getty Images)
NEW YORK, NY - OCTOBER 12: Instagram co-founder Kevin Systrom speaks onstage during Vogue's Forces of Fashion Conference at Milk Studios on October 12, 2017 in New York City. (Photo by Kevin Mazur/Getty Images)
NEW YORK, NY - OCTOBER 12: Instagram co-founder Kevin Systrom speaks onstage during Vogue's Forces of Fashion Conference at Milk Studios on October 12, 2017 in New York City. (Photo by Kevin Mazur/Getty Images)
NEW YORK, NY - JUNE 01: Kevin Systrom poses backstage at the 2015 CFDA Fashion Awards at Alice Tully Hall at Lincoln Center on June 1, 2015 in New York City. (Photo by Kevin Mazur/WireImage)
LONDON, ENGLAND - MARCH 09: Nicole Schuetz (L) and Kevin Systrom attend a party hosted by Instagram's Kevin Systrom and Jamie Oliver. This is their second annual private party, taking place at Barbecoa on March 9, 2015 in London, England. (Photo by David M. Benett/Getty Images for Instagram)
Instagram founders Mike Krieger (L) and Kevin Systrom attend the 16th annual Webby Awards in New York May, 21 2012. REUTERS/Stephen Chernin (UNITED STATES - Tags: SCIENCE TECHNOLOGY ENTERTAINMENT)
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"We think (the) departures are a notable negative for Facebook."

The sudden loss of the pair follows the departures of WhatsApp co-founders Jan Koum and Brian Acton and a reshuffling of Facebook's executive ranks earlier this year.

A Bloomberg report said Systrom and Krieger had been frustrated by a rise in the day-to-day involvement of Zuckerberg, who has become more reliant on Instagram in planning for Facebook's future.

Facebook's shares were down 2.4 percent at $161.51 in early trading, knocking more than $11 billion off the stock's market value.

Instagram co-founder Mike Krieger:

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Instagram co-founder Mike Krieger
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Instagram co-founder Mike Krieger
WEST HOLLYWOOD, CA - JANUARY 06: Instagram CEO Mike Krieger (L) and Kaitlyn Trigger attend Vanity Fair x Instagram Celebrate the New Class of Entertainers at Mel's Diner on Golden Globes Weekend at Mel's Diner on January 6, 2018 in West Hollywood, California. (Photo by Donato Sardella/Getty Images for Vanity Fair/Instagram)
DUBLIN, IRELAND - NOVEMBER 03: Mike Krieger, co-founder of Instagram the second biggest social media platform in the World speaks on stage about Instagram during the first day of the 2015 Web Summit on November 3, 2015 in Dublin, Ireland. The Web Summit is now in it's 4th year and is technology's most global gathering. In numbers, it has 42,000 attendees from 134 countries, 1,000 speakers, 2,100 startups and 1,200 media. (Photo by Clodagh Kilcoyne/Getty Images)
3 November 2015; Mike Krieger, Co-Founder, Instagram, on the Content Stage during Day 1 of the 2015 Web Summit in the RDS, Dublin, Ireland. Picture credit: Brendan Moran / SPORTSFILE / Web Summit (Photo by Sportsfile/Corbis via Getty Images)
DUBLIN, IRELAND - NOVEMBER 03: Mike Krieger, co-founder of Instagram the second biggest social media platform in the World speaks on stage about Instagram during the first day of the 2015 Web Summit on November 3, 2015 in Dublin, Ireland. The Web Summit is now in it's 4th year and is technology's most global gathering. In numbers, it has 42,000 attendees from 134 countries, 1,000 speakers, 2,100 startups and 1,200 media. (Photo by Clodagh Kilcoyne/Getty Images)
DUBLIN, IRELAND - NOVEMBER 03: Mike Krieger, co-founder of Instagram the second biggest social media platform in the World speaks on stage about Instagram during the first day of the 2015 Web Summit on November 3, 2015 in Dublin, Ireland. The Web Summit is now in it's 4th year and is technology's most global gathering. In numbers, it has 42,000 attendees from 134 countries, 1,000 speakers, 2,100 startups and 1,200 media. (Photo by Clodagh Kilcoyne/Getty Images)
Mike Krieger and Kaitlyn Krieger attend FOG Design+Art Preview Gala 2018 on January 10, 2018 at Fort Mason Center in San Francisco, CA. (Photo - Devlin Shand for Drew Altizer Photography)
NEW YORK, NY - MAY 12: (L-R): Kim Kelleher, Publisher,Wired, Mike Krieger, Cofounder, Instagram and Scott Dadich, Editor in Chief, WIRED attend the WIRED Business Conference 2015 at Museum of Jewish Heritage on May 12, 2015 in New York City. (Photo by Brad Barket/Getty Images for WIRED)
Instagram founders Mike Krieger (L) and Kevin Systrom attend the 16th annual Webby Awards in New York May, 21 2012. REUTERS/Stephen Chernin (UNITED STATES - Tags: SCIENCE TECHNOLOGY ENTERTAINMENT)
Instagram founders Mike Krieger (L) and Kevin Systrom accept their webby breakout of the year awards during 16th annual Webby Awards in New York May, 21 2012. REUTERS/Stephen Chernin (UNITED STATES - Tags: ENTERTAINMENT SCIENCE TECHNOLOGY)
SAN FRANCISCO, CA - MARCH 20: Instagram Co-Founder Mike Krieger (R) and guest arrive at the San Francisco Premiere For HBO's 'Game Of Thrones' Season 3 at Palace Of Fine Arts Theater on March 20, 2013 in San Francisco, California. (Photo by C Flanigan/Getty Images)
NEW YORK, NY - MAY 21: Instagram founders Kevin Systrom and Mike Krieger attend the 16th Annual Webby Awards on May 21, 2012 in New York City. (Photo by Ben Gabbe/WireImage for The Webby Awards)
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"To the extent that their departures represent Zuckerberg exercising more power and being less accountable, such a development would underscore the need for an independent board chair," said Jonas Kron, senior vice president at Trillium Asset Management.

The institutional investor, which holds more than 52,000 shares in Facebook, urged Facebook in July to appoint an independent board chair to oversee management.

Systrom wrote in a blog post on Monday that he and Krieger planned to take time off and explore "our curiosity and creativity again."

Zuckerberg described the two as "extraordinary product leaders" and said he wished them all the best and was looking forward to seeing what they build next.

Facebook bought Instagram in 2012 for $1 billion. Instagram had been hailed in Silicon Valley as a flashy acquisition done right, with the team kept relatively small and Systrom having the freedom to add features such as peer-to-peer messaging, video uploads and advertising.

Instagram has over 1 billion active monthly users, a sharp rise from the 30 million users when Facebook bought the app.

Facebook's shares are currently down about 6 percent this year, following six years of stellar gains.

Concerns over the fallout of the Cambridge Analytica privacy scandal and signals that a rise in costs would hurt Facebook's margins for years, fueled the biggest one-day wipeout in U.S. stock market history in July.

(Reporting by Munsif Vengattil and Vibhuti Sharma in Bengaluru; editing by Patrick Graham and Saumyadeb Chakrabarty)

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