Why Facebook At Work Makes Sense For Facebook! (video)

  • Facebook could leverage its huge user base for Facebook At Work.
  • Facebook At Work could drive user growth, monetization and revenue.
  • Facebook At Work could be a window to China.

Facebook (NASDAQ:FB) is believed to be developing a professional networking site, ‘Facebook At Work’. Facebook’s rumored work-in-progress, has caused quite a stir, well before its official unveiling, let alone launch. Facebook At Work will be direct competition for professional networking site, LinkedIn (NYSE:LNKD). Not surprisingly, following the emergence of reports about Facebook’s ‘secret’ project on November 16, LinkedIn valuations have taken a hit, and the stock has fallen by over 6%. Going by the latest LinkedIn earnings, the company has been chugging along nicely, barring its low to marginally negative profitability. Will Facebook At Work impact LinkedIn? While that remains to be seen, the move could hold significant potential for Facebook. If implemented successfully, the new platform could drive Facebook earnings.

Facebook At Work Makes Sense For Facebook

Social networking sites inevitably feel the pressure to keep evolving, to hold the attention of their users, or to expand their reach. Facebook At Work could open up new streams of user growth, monetization, and thereby revenue growth. Quoting a report on Facebook At Work:

"The service is said to feature ways to communicate with colleagues, connect with other professionals, and collaborate on documents. Personal profiles and professional profiles would be segregated for the sake of privacy, and would be free initially. Beyond LinkedIn, this service means Facebook would compete with other large enterprise software makers like Google and Microsoft , as well as start-ups such as Slack."

So, why is Facebook At Work, a good progression for Facebook?

Facebook User Base & User Growth

Whether or not Facebook At Work will make a big impact remains to be seen. But with a large user base that it could potentially leverage, Facebook is well positioned to make an attempt. Further, Facebook could end up acquiring the seemingly few users who aren’t already within its ecosystem.

Facebook has about 1.35 billion active users (Facebook monthly active users or MAUs), as against a LinkedIn member base of 332 registered members and 90 million active members (LinkedIn unique visiting members). Clearly, there’s no debate about Facebook’s superior reach.

On mobile, Facebook’s 1.12 billion mobile users (Facebook Mobile MAUs) trump LinkedIn’s 42 million (LinkedIn Mobile Unique Visiting Members). Facebook has been able to garner an 83% user adoption on mobile, a fact that bodes well for Facebook At Work.

Further, Facebook unbundling and acquisitions make for a strong ecosystem of popular apps with growing users.

  • WhatsApp User Base - 600 million active users
  • Facebook Messenger User Base - 500 million active users
  • Instagram User Base - 200 million active users

While there might be a substantial overlap in users of the four platforms, the Facebook ecosystem is likely to be bigger than 1.35 billion active users, given that each of its apps could have some exclusive unique users.

Facebook At Work Opens Up New Revenue Streams

Facebook ad revenue accounted for about 92.5% of its total revenue in Q3 2014. The new platform could potentially boost ad-revenue by:

  • Adding another dimension to what Facebook knows about users
  • Increasing the time spent on Facebook owned sites

Given the formal nature of Facebook At Work, advertising on the site could be limited, if not absent. However, Facebook could target users on other properties, more so now, with its new ad-network Atlas.

More importantly, Facebook At Work could open up completely new sources of revenue. For instance, LinkedIn revenue sources are very different from Facebook revenue sources.

Facebook At Work

Chart: LinkedIn Revenue Sources

LinkedIn ad revenue contributed under 20% of its total revenue in Q3 2014. So, if Facebook enters the professional networking space, new revenue segments could open up for the platform.

Facebook Monetization Rates Could Improve

Facebook ARPU (Average Revenue Per User) for Q3 was $2.37 per active user. LinkedIn ARPU for Q3 came in at $6.3 per active member. LinkedIn monetizes users differently, and its higher ARPU is largely attributable to its different revenue streams. The case could be similar for Facebook At Work, implying potentially higher monetization rates.

Even if Facebook’s professional network manages to achieve half the monetization rate that LinkedIn has, the revenue generated could be meaningful.

Users (millions)

Revenue (millions)

% of FB Revenue










Note: Assuming Facebook At Work revenue per user (average) of $3.16, half of LinkedIn revenue per user (ARPU).

Facebook At Work A Doorway To China?

Facebook is banned in China and so is Twitter, but LinkedIn isn’t. Given the nature of content on professional networking sites, Facebook At Work could turn out to be a window to China, if it manages to comply with China’s censorship norms.

Everyone wants a piece of the Chinese market, given the size and potential of businesses in China. The latest case in point being, the Alibaba IPO. LinkedIn estimates a potential of 140 million users in china, a little over 23% of LinkedIn’s estimate of global ‘knowledge workers’.

Sure, LinkedIn has to contend with local competition, but the rewards are compelling, and subsequently, LinkedIn China has taken the shape of Ling Ying, a Chinese language version of the site.

China is still a very difficult market to crack, and is laden with uncertainties. However, Facebook At Work does stand a chance, as long as users don’t have a hangover from Facebook (At Home?).

Clearly, Facebook At Work is not a bad idea at all.

To sum up, given Facebook’s large user base, the site is well positioned to attempt a foray into professional networking. Of course the focus areas for Facebook and Facebook At Work will be different, which is something the management will have to get right.

If Facebook At Work does work, it could drive user growth, monetization rates, revenue growth and open the doors to China. Most importantly, if it works, the site could drive Facebook valuation.

As for LinkedIn, Facebook At Work might not be an immediate threat, but they probably won’t be taking it lightly.

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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Comments on this article and FB stock

user profile picture
facebook at work is trying to get into enterprise. mostly competes with microsofts yammer, salesforce.com chatter, ibm connections and not exactly linkedin.
1 reply
user profile picture
but agree that its huge potential; for facebook
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