FB Stock: Leaked Document Reveals Facebook Inc’s Next Venture

FB StockThis Could Be Big for Facebook Stock

A recently leaked document reveals that Facebook Inc (NASDAQ:FB) is covertly working on another big project. If successful, this venture could end up adding some solid value to FB stock.

Two TechCrunch reporters have managed to get their hands on a document that Facebook sent out to one of its advertisers. The tech web site has revealed some of the elements of this leaked document on Thursday, which bears some interesting implications for Facebook stock.

It is being reported that Facebook is pitching a new advertising idea to businesses. Facebook is about to monetize that one service it never initially planned to monetize—its messenger app. Yes, Facebook is finally rolling out advertisements on “Facebook Messenger.” (Source: “Facebook Plans To Put Ads In Messenger,” TechCrunch, February 18, 2016.)

Allow me to explain why this could be huge for Facebook…

At first thought, it sounds like a bad idea. Imagine if your phone buzzes and you rush to it, hoping to see a message from your friend—only to find out that it’s a spam advertisement. Ads on a messaging app would be counterintuitive, wouldn’t they?

But wait…the leaked document hints at how this will be made possible.

Facebook is not going to allow businesses to send ads to just about anyone. Instead, ads will only be sent out to users who will voluntarily initiate a message thread with these businesses. In other words, advertisers will not be allowed to initiate a new message thread; they could only continue an on-going discussion.

If successfully implemented, this could create a massive online-to-offline (O2O) ecosystem for Facebook Messenger’s 800 million monthly active users (MAUs).

Let me explain how…

This move complements another one of Facebook’s big bets on its Messenger app. In the last half of 2015, Facebook launched an artificially intelligent (AI) assistant for Facebook Messenger. The Facebook “M Assistant,” which is still in its testing phase, is revolutionizing the way messaging apps are traditionally used. The AI assistant does everything from ordering pizza to hailing a taxi through Facebook Messenger.

Consider this example to better understand what I am getting at here: Let’s say you booked an Uber ride through Facebook Messenger, without having to leave the app. You bought the services online that are delivered to you offline. Thus, you become part of Facebook’s O2O ecosystem. When you booked the ride, the “M Assistant” initiated a message thread with the business. Going forward, Uber can send you promotional ads on the same message thread under Facebook’s new advertising policy. Get the idea?

The marketing strategy is absolutely ingenious!

It made perfect sense for Facebook to be monetizing its messaging app. Facebook Messenger is on its way to hitting the one billion MAU mark—something only WhatsApp has managed to achieve, which is also owned by Facebook.

In fact, Facebook Messenger has recently beaten YouTube to take the second spot in comScore’s top 15 smartphone apps. The first spot is also taken by Facebook’s social media app. As comScore reports, Facebook Messenger now has a more than 62.5% audience reach, up from 60% in November 2015. (Source: “comScore Reports December 2015 U.S. Smartphone Subscriber Market Share,” comScore, February 4, 2016.)

The Bottom Line on FB Stock

Virtually all of Facebook’s latest ventures have been right on target. The company has expanded by leaps and bounds within three years of going public. It has forever silenced the bears with its stellar financial performance quarter after quarter.

This new venture, if successful, will bring in more ad dollars for the company. The prospects look very promising for FB stock from where I see it.