A New Feature Promises Big Gains for FB Stock
The last two years have been extraordinary for Facebook, Inc. (NASDAQ:FB), but it seems that Mark Zuckerberg is just getting warmed up. Stepping into new markets, like publishing and virtual reality (VR), has pushed FB stock sky-high. But there’s one other frontier that could unlock huge gains for Facebook stock.
The industry I’m thinking of was pioneered by companies like Kickstarter and Indiegogo. That’s right, I think Facebook should enter the crowdfunding market. It’s not as crazy an idea as you might think. After all, Facebook has an absolutely monstrous user base.
Kickstarter and the other crowd-sourcing web sites gave small companies an interesting funding option. Rather than taking out a bank loan or finding investors, a small business could just get small amounts of money from many different people in order to reach a defined funding goal. Facebook would be great at this business.
But rather than jump into a crowdfunding platform immediately, it makes sense for Facebook to slowly edge into the industry. In fact, it looks like that’s exactly what’s happening.
Facebook recently built a new fundraising tool that gives nonprofits a megaphone for their campaigns. (Source: “Introducing New Tools for Nonprofits,” Facebook Newsroom, November 18, 2015.)
With just a few taps on their smartphones, people can easily donate to charities on Facebook and share their donations with friends. Once Facebook users grow accustomed to the idea of entering a credit card number on Facebook, it would be unbelievably easy to expand the fundraising tool to startups and for-profit companies.
The results would be great for FB stock, though Kickstarter wouldn’t be too happy about it.
Is Facebook Stock a Threat to Kickstarter?
Moving sideways into new industries is exactly how Facebook will continue to grow and remain relevant.
Take, for instance, Facebook’s entrance into the publishing industry. “Facebook Video” has propelled the company’s stock higher on the chart. Just scroll down your timeline and watch a video start playing silently as the cursor moves over it. The first few seconds are usually enough to spark interest and have the user click on the video to play it in its entirety with sound. It was a brilliant way of driving traffic to video content and industry insiders took note. Plus, Facebook was dangling access to 1.44 monthly active users in front of content producers, making it an irresistible deal. But, of course, access comes at a price.
Yet, content producers are willing to pay for a large market. FB stock is up nearly 132% in the last two years and a lot of it has to do with Facebook breaking into the publishing industry. Likewise, breaking into crowd funding could be just as profitable for Facebook stock.
Chart courtesy of www.StockCharts.com
The Facebook algorithm is already incredible at guessing what users want to watch or matching ads with the right users. You don’t need to strain the imagination to think Facebook would be equally good at driving money to companies, especially when it already has 1.44 billion monthly users. I’d be terrified if I was in Kickstarter’s position right now.
FB Stock Could Be Poised for Big Returns
Overall, I’m very bullish on Facebook. The expansionary maneuvers are working to perfection, as we’ve seen with the company’s video publishing breakthrough. Early in 2016, we’ll see Facebook’s “Oculus Rift” VR headset hit the market, as the first virtual reality device to compete with Sony Corporation’s “PlayStation 4” console and Microsoft Corporation’s “Xbox One” console. Most analysts expect the VR headset to draw in a lot of revenue for Facebook.
As for the fundraising app from Facebook, right now, it probably won’t generate any earnings, but it will set the ground for a Kickstarter-like crowdfunding platform that could drive Facebook stock through the roof.