Mark Zuckerberg, the CEO of Facebook, Inc. (NASDAQ:FB), is getting a lot of flack for his side project to bring Internet to the unconnected corners of the world. Despite those complaints, the truth remains that Internet access could help lift millions of people out of poverty. Oh, and it can help drive up FB stock too, making it a win-win proposition.
A few years ago, Zuckerberg used some of his personal wealth to create a non-profit dedicated to expanding Internet access around the globe. The project is called Internet.org. His mission was largely humanitarian, but whether by coincidence or design, it could also benefit Facebook.
One of its principles, especially in places like India, is to make the Internet a commonly used tool. But that can be tricky. Internet bandwidth, for instance, is a sparse commodity in the subcontinent, meaning it needs to be dispensed carefully. (Source: “Mark Zuckerberg can’t believe India isn’t grateful for Facebook’s free internet,” Quartz, December 28, 2015.)
And therein lies the bait.
Facebook Growth in India
Through its telecom partner in India, Internet.org would grant users free access to select web sites and services. Critics claim that partial access to the Internet violates net neutrality, the bedrock principle of Internet fairness.
Mark Zuckerberg countered this argument by saying partial access was the only thing that was possible—a stepping-stone is better than nothing at all. In articulating that defense, Zuckerberg often uses the analogy of a farmer who needs to check weather forecasts. (Source: Ibid.)
The farmer doesn’t need to binge on Netflix shows or subtly troll people on Twitter. He just needs to tend his crops and the most up-to-date information via the Internet can help him do just that. Somewhere down the line, it would fantastic for him to have full access to the Internet, but that’s not guaranteed, especially because it’s free!
In fact, half of the people who try the “Free Basics” program in India sign up for full access within 30 days. From my vantage point, that looks like a successful program. However, a handful of bureaucrats in New Delhi want to take on the “Big Bad American Corporation” that is Facebook. (Source: Ibid.)
Putting aside that argument for a second, though, let’s consider the investment angle here. As part of the Free Basics program, users get a chance to make a Facebook account. That’s right, Zuckerberg found a way to help humanity and make inroads on the one billion people in India who don’t already have Internet access.
By tapping into this gigantic market, the Facebook CEO is cementing years of growth in the company’s subscriber base.
Forecasting for FB Stock in 2016
Subscriber growth is incredibly important for Facebook. Showing an expanding base of users is an implicit signal of relevance and buys time to develop monetization strategies. If you don’t believe me, just consider the beating Twitter, Inc. took when its subscriber growth faltered.
The mainstream financial press was willing to write Twitter stock off as a relic before the company shuffled its upper management. Bringing back Jack Dorsey was a brilliant move, but that doesn’t mean Facebook should ever be in the same position.
It’s best to avoid that kind of drama, if you can, and Mark Zuckerberg is doing just that, boosting FB stock in the process. Ah, what a genius move, no?