Internet.org Could Be a Boost for FB Stock
Lo and behold! It’s finally official! Facebook, Inc.’s (NASDAQ:FB) Internet.org service, which was earlier only available in some areas of India, is now available throughout the entire country. Inarguably, Zuckerberg is on his way to creating the biggest Internet company in the world and ostensibly, he might be able to claim world domination in the process. Here’s what this move means to FB stock.
Facebook is aiming to reach out to people who don’t know what Facebook is or who can’t afford to access it. Simply put, Internet.org is Facebook’s effort to connect remote areas of the world where Internet connectivity is either unaffordable or unavailable. Launched two years ago, the service has so far successfully entered 30 underdeveloped and developing countries. (Source: “Facebook’s Internet.org Now Available Throughout India,” TechCrunch, November 25, 2015.)
How’s Facebook making this possible? It’s simple: by partnering with top local telecom providers in the respective countries. Facebook has created a mutualistic partnership with the local Internet service providers, whereby the service will be provided free of cost in remote areas. This allows low-income-earners to access a handful of web sites, including Facebook, WhatsApp, and Wikipedia.
The concept, more or less, resembles the classic razor-blade model that Gillette used back in the time and which became a marketing thumb-rule for the generations to follow. Gillette came up with the ingenious idea to sell razors at nominal prices and make money off a complementary product offering. The company sold replacement blades at higher margins and made money off the returning users who had already bought the inexpensive Gillette razors.
Something similar could be at play here. Facebook’s Internet.org service is free for users but introduces them to Facebook’s monetized platform, where the company will be able to pull ad dollars from the bigger volume of traffic.
Apparently, Zuckerberg has realized that the biggest market in the world, China, largely remains inaccessible to the company because of the country’s tight control over content. So what better way to expand than to target the next most populated markets? After all, more people means more traffic, more clicks, and more money. Four of the most populous countries in the world, including India, Indonesia, Pakistan, and Bangladesh, are now under Facebook’s spell with Internet.org.
The move has faced its fair share of criticism, with rivals and activists raising questions about the neutrality of the service. But whether one likes it or not, you must admit that the move is absolutely brilliant.
The Bottom Line on FB Stock
To sum it all up, we won’t be wrong to predict that Facebook is on track to becoming the biggest Internet force. So far, Zuckerberg has been taking all his steps in the right direction. Facebook stock has been at more than 175% above its initial public offering (IPO) price since its move to go public and is up more than 34% in its year-to-date run.
Take my word on it: the future prospects for FB stock look even brighter.