When Facebook Inc. announced the purchase of Instagram for $1 billion in April 2012, a few analysts shook their heads, calling it a gamble, especially because Facebook CEO Mark Zuckerberg made the purchase without even consulting the board.

But now it seems that gamble has paid off and then some, the with rapidly growing image capture and sharing app now being valued at over $35 billion.

The valuation came from Citigroup analyst Mark May, who cited increased ad revenue and a quickly growing user base that surpassed expectations.

Though the market in general performed well this week, Monness Crespi Hardt & Co. analyst James Cakmak believes Facebook’s strong performance is more than a fluke.

“While the shares have likely benefited from the recent market rally, we see growing confidence in the monetization prospects of Instagram as an impetus to the recent uptick,” Cakmak wrote in an email.

When Facebook purchased Instagram in April 2012, the service had barely a dozen employees and around 50 million users with no real revenue. Instagram now has over 300 million users and is one of the hottest advertising targets for younger age groups. Instagram’s value in the last two years has doubled under Facebook’s ownership.

Facebook back on top while Twitter falls behind

While Facebook’s core service has fallen in popularity with younger demographics, Instagram remains incredibly successful with teens, which partly explains why the possibility of advertising revenue on the service contributes to the app’s high value. Facebook alone is projected to take 8 percent of the global ad market in 2015.

The news of Instagram’s value drove Facebook’s stock to a record high, reaching $81.45 a share earlier this week. The share price has nearly doubled in 2014, and prospects are looking good for the social media company in 2015, with plans for expanded video advertising on Facebook’s mobile app and the main Facebook website.

Meanwhile, Twitter Inc. has been in rough shape over the last few months, with dwindling stock prices and rumors of CEO Dick Costolo’s departure amidst falling investor confidence in his leadership. Twitter’s popularity was recently surpassed by Instagram, the the micro-blog site is struggling to compete in the volatile social media industry.