Clear the Runway for FB Stock
Facebook Inc. (NASDAQ:FB) has already surpassed all expectations. Investors had it pinned down as “just a social media company,” but Facebook quickly outgrew that mantle. FB stock needs a pricing that reflects its ambitious expansion.
There’s one product in particular that could send Facebook stock soaring. Very few people in the media are talking about it, but this is one of the smartest decisions the company has ever made. I wouldn’t have even believed it possible a few years ago.
I’m talking about “Facebook Payments.” The company is breaking into the digital payments game, but they are doing it in stages. I think Mark Zuckerberg realized people might find it invasive if they suddenly had to enter debit card information on Facebook.
So the company has introduced Facebook Payments in more subtle forms. At first, it was so you could pay for certain in-browser games. After some success, the program expanded so you could donate to charities through your Facebook account. (Source: “Facebook Payments,” Facebook Inc. Web site, last accessed March 4, 2016.)
Isn’t that nice? You can help your favorite charities by clicking a single button. That must have been a purely altruistic gesture from Facebook, right? Think again.
Payments recently got added to “Facebook Messenger.” You can now send money to any of your friends through Messenger, but don’t think it’ll stop there. Sooner or later, retailers are going to migrate as well. Facebook is a portal to 1.6 billion users; you don’t think businesses want a piece of that? It would give them another point of sale.
I don’t think it’s crazy that Facebook could become the next sensation in online retail. They already dominate the online publishing industry by connecting content with users, so why would physical products be any different? Facebook wouldn’t even need to manage the shipping process.
The company would simply act like eBay Inc.: it would connect users with the goods they want, facilitate a frictionless payment, and then step back. As in the publishing case, I’m guessing that Facebook will draw its revenue from the enterprise side of the equation.
I’m in the media and I can tell you Facebook is the big kid in the playground now. If you have a popular news site and you want your followers to see your articles, you have to pay a toll. Only then does Facebook give you visibility.
Once they start charging online retailers for access, the profits could be stunning. Of all the reasons to be bullish on FB stock, this one has me the most excited.