We all know about Instagram now, but Facebook Inc. stock (NASDAQ:FB) could have 3 new catalysts.
Menlo Park, California-based Facebook Inc (NASDAQ:FB) has had a good run so far in 2017, rising by over 22% Year To Date (YTD). However, the rally might not be over. While analysts are still increasingly bullish on Facebook's prospects based on its current set of catalysts, the company is putting in place growth drivers that could keep growth at elevated levels over the coming years. Even as concerns over peaking ad-loads on the core Facebook platform seemed to be coming to the fore, Facebook has managed to leverage its photo sharing app, Instagram, to drive top line numbers. And while Instagram still has huge potential, Facebook is exploring what it can do with its other online properties, like Messenger and WhatsApp, both of which could propel Facebook's next phase of growth.
Facebook Is Now Closer To Monetizing Its Messenger Users.
At the keynote address for its annual developers conference on Tuesday, 17th April, Facebook unveiled some of its plans for the future. Among them was a plan to monetize the 1 billion strong user base on its Messenger app. The plan consists of a wide array of applications, from letting people discover and contact businesses directly on the platform, to having tabs that can enable the use of lightweight games within the app. Facebook also wants to allow users the assistance of bots in activities like playing songs or making reservations at a restaurant. David Marcus, Facebook’s Vice President of messaging products, is quoted as saying “We have a shot of becoming the Yellow Pages of messaging too.”
According to Patrick Moorhead, a popular technology commentator, “The thesis is that Facebook will charge companies fees and a percentage of sales using Messenger,”. Also among the mix, are plans of other capabilities like peer to peer payments and integration with Spotify, which will serve users on iOS or Android. How well these plans work remains to be seen. What's of interest, though, is that Facebook is finally set to attempt monetization on the platform with a big push. And given the user base on the Messenger app, it might only have to be reasonably successful in order to match Instagram's contribution to Facebook's top line numbers.
Facebook Reportedly Looking To Monetize WhatsApp Too.
India is reportedly WhatsApp's largest market, with about 200 million users. And if rumors are to be believed, WhatsApp is mulling the launch of a peer to peer payments service in this geography, where digital payments have shot up in recent times. To cash in on this wave, WhatsApp is reportedly looking to grab a piece of the market. One of the most successful homegrown digital payments services in India has been Paytm, which counts the likes of Alibaba (NYSE:BABA) among its set of investors. The space is so popular that SoftBank is believed to be exploring the top option to invest between $1-1.5 billion in Paytm.
Interestingly, WhatsApp has nearly the same number of users in India as does Paytm. What's more, with users better accustomed to using the app, as opposed to some of the newer lot of payment apps and wallets, WhatsApp won't have to fight the first part of the battle, which is to shake off the inertia and get people to start using its app. To further support its cause, if WhatsApp does this well, it could potentially launch similar services on a host of other geographies, including some of the bigger digital payments markets like the US. Like in the case of Messenger, WhatsApp too has a solid user base of 1.2 billion MAUs. And digital payments can be a fairly lucrative business. At least, way more lucrative than the free service that is WhatsApp.
Credit Suisse Sees FB Stock At $175 A Share.
Credit Suisse analyst Stephen Ju recently hiked his price target for FB stock from $170 to $175 a share. Putting to rest the concerns over peaking ad loads on the core Facebook platform, Ju expects Facebook's ad-revenue growth to continue. And he expects that Facebook won't need to bump up ad loads on the platform achieve this sustained growth. Quoting from a post on Investopedia:
"near-term revenue growth will be driven by Instagram and premium video content. Based on conversations with advertising players, the analyst also says dynamic ads for travel at Facebook also appear to be "gaining traction".
Ju's hiked price target comes after a slew of analysts, including Samuel Kemp of Piper Jaffray recently came out with bullish commentary on the stock. With Instagram set to secure near to medium term growth, Facebook looks set to drive long term growth by monetizing its relatively untapped properties, which could drive FB stock higher in the long run.
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