FB Stock Could Soar on This Deal
Mark Zuckerberg of Facebook Inc (NASDAQ:FB) may lack the charisma that the likes of Elon Musk and Steve Jobs enjoy, but he certainly holds a vision that grants him a position up there at the podium. Owners of FB stock must keep an eye on some recent developments.
In under a decade’s time, Zuckerberg’s brainchild has not only redefined people-to-people social interactions, but it has also transformed business-to-people relationships.
They may call Amazon.com, Inc. the biggest online platform that drives B2B (business to business) and B2C (business to customer) e-commerce, but Facebook is gradually and steadily turning into a very promising substitute that could very well loosen Amazon’s grip on the online commerce industry.
How Facebook is Redefining E-Commerce
Facebook is making a push in a growing niche that marketers like to call the online-to-offline (O2O) ecosystem. Essentially, Facebook is creating a platform through which businesses meet customers online to sell their services that are delivered offline.
But here’s the most interesting part. Instead of using its social media platform, which is already monetized, Facebook decided to use two of its non-monetized platforms to make this shift possible—that is, through two of its messaging apps.
Before I get to its latest initiative, let me remind my readers that this revolution began at the end of 2015, when Facebook introduced the “M Assistant” for its Facebook “Messenger” app—an artificially intelligent (AI) assistant that performs tasks for users.
M Assistant is transforming the way people once used Facebook’s messaging app. The app now does more than just send messages, pictures, or GIFs—it can now hail a taxi for you, order a pizza, purchase a book, make a hotel or spa booking, deliver a birthday present to granny on your behalf, and book an appointment with the dentist, to name a few. In other words, you can book all of these services online through the app, which will ultimately be delivered to you offline.
Doubling down on this O2O business, Facebook has now made its “WhatsApp” messenger free for all. Under this new initiative introduced this week, you no longer have to pay that $1.00 annual subscription fee.
But then, how will Facebook make money off of this $19.0-billion acquisition when it has also promised not to run ads on it? Of course, Facebook has a plan!
The company is running new tests on WhatsApp under which it is allowing businesses to make accounts on the messaging app and connect directly with users—B2C marketing. (Source: “WhatsApp Ditches $1 Annual Fee, Tests Business Accounts But No Ads, Says CEO,” TechCrunch, January 18, 2016.)
The service is still in its nascent phase, but it is certainly a big stepping-stone towards Facebook’s grand scheme of creating its own O2O ecosystem.
To give you an idea of how big this ecosystem could be, take a look at the following stats…
According to comScore, Facebook’s Messenger currently has an over 60% reach in the U.S. market and is the third most used app in the country—the first being Facebook’s social media app. (Source: “comScore Reports November 2015 U.S. Smartphone Subscriber Market Share,” comScore, January 7, 2016.)
Plus, let’s not forget that Facebook also owns the most popular messaging app—WhatsApp—with more than 900 million monthly active users (MAUs). That number even beats the Messenger app’s MAUs.
Evidently, together, these two messaging apps are about to become a powerhouse of revenue for Facebook.
The Bottom Line on FB Stock
Forget about social media. This new venture is revolutionizing Facebook’s business model from a social media company to a full-blown Internet service provider. All of which is bullish for FB stock.