It is hard to compare companies that are bought out, since they are valued higher due to the network affects with their new parent company.
i.e. if Instagram had a valuation of $800 million the $1 billion purchase price could make sense if Facebook believes their combination could produce the difference in price.
It's not just network effects. Purchase of Snapchat at $21 billion, or Bebo at $870 million, had a lot to do with attempted strategic positioning and/or edging out competitors who were eyeing acquisition. Doesn't always mean the acq will perform to price.
i.e. if Instagram had a valuation of $800 million the $1 billion purchase price could make sense if Facebook believes their combination could produce the difference in price.