Facebook At Work: Another Catalyst For Facebook Stock

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  • In 2016, Facebook is expected to launch the much-awaited Facebook at Work platform.
  • Facebook modified its known features to fit the enterprise market and offer a comprehensive solution.
  • Beyond monthly fees and ad revenues, Facebook could also expand the new platform to other professional markets, like career search.
  • This initiative has the potential to become a significant value driver for the Facebook stock.

The market for enterprise software collaboration tools is heating up with the ATLASSIAN CP-A (NASDAQ:TEAM) IPO last week, Citrix's (NASDAQ:CTXS) spin-off of its GoTo division, and Facebook's (NASDAQ:FB) official launch of a broadly available version of Facebook at Work (referred to as FaW) in 2016. Facebook’s new enterprise initiative is one of the company’s most desired products that could enable it to penetrate the lucrative market for enterprise software and drive Facebook stock higher. Along the years, Facebook integrated a large number of features into its social network that could be used by the corporate market, like content sharing, chat, events scheduling, news feed, groups, and many more that, with slight modifications, could fit best with corporate collaboration requirements.

Also read: 5 reasons to buy Facebook stock for a strong 2016.

Facebook has dominated the social media market for a long period, the company currently controls half of the market’s traffic. After Facebook established its dominance and leadership position, making it the top social media stock, Facebook (NASDAQ:FB) is now looking to develop new revenue streams, like the peer-to-peer payment transactions via FB Messenger, virtual reality via Oculus VR, and even satellite Internet via Internet.org.

Facebook revenue could benefit by penetrating the enterprise software market and generating a steady and stable revenue stream with a long-term approach, as corporates don’t like frequent changes and strive for long term stability in their internal software tools. However, as appealing and reasonable as it sounds, the enterprise software collaboration market has some very dominant players like Microsoft (NASDAQ:MSFT), Alphabet Inc-C (NASDAQ:GOOG), Salesforce (NYSE:CRM), and Slack, which provide good solutions that meet enterprise requirements. Why would companies choose FaW? To answer that, let’s first see what exactly FaW is.

FaW allows every employee to create a professional profile, share content, and post updates, in the same way these actions are done in Facebook. The difference is that FaW is a separate standalone system in which employees’ information is viewed only by their colleagues, and only employees of the same company can interact among themselves. Facebook at work also has a built-in chat app that uses FB Messengers’ calls feature, which could enable employees not only to interact and chat using the FaW platform but also to interact via voice calls when needed directly from the FaW platform. Facebook commits to some level of security, which other enterprises will probably choose to strengthen in partnership with Facebook.

Since FaW is based on Facebook’s familiar interface and most people on the globe have Facebook accounts, it enables employers to reduce the training effort to ramp up employees/new employees on the new FaW platform compared to the other solutions. Currently, Facebook offers this service free for a testing period, and it is still unclear what the pricing strategy will be. I believe that Facebook (NASDAQ:FB) will offer a price-per-user plan that will be ad-free and a free plan that will include advertisements. In the long run, this is a good development for Facebook, which not only benefits from the monthly fee income but also offers advertisers a unique opportunity to display very specific ads to a particular and hard-to-reach target audience. Once Facebook lays the ground for a professional social network, it could have the information gathered on this platform and offer a career solution similar to LinkedIn (NYSE:LNKD).

Conclusion

Even though the FaW initiative is often overlooked, leaving the focus on Facebook’s VR initiative, the P2P payment attempt and satellite Internet, Facebook’s new professional platform has great potential to generate revenues for the Internet giant and also drive Facebook stock price. Facebook tweaks popular existing features, such as groups, events, chat, voice calls, and content sharing, to fit the enterprise market and to offer its known interface in a corporate feel and touch. Facebook (NASDAQ:FB) could generate monthly fees from this new service and offer free plans that include ads for smaller organizations and benefit from valuable ad revenues. In the future, Facebook could expand 'Facebook at work' further to generate even more revenues. In my eyes, this is another catalyst to hold onto your Facebook stock longer.

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