Facebook’s Strong Competitive Edge to Push FB Stock Higher
Facebook Inc (NASDAQ:FB) stock is on a roll, and is poised to go higher as the social media company appears to be competing in a space with almost no competition.
FB stock has already gained 16% year-to-date, as compared to the six-percent gains posted by the S&P 500 index. Facebook stock closed at $133.72 on Tuesday.
While CEO Mark Zuckerberg released his 6,000-word manifesto last week, his company was busy devising ways to trounce its rivals. Facebook has almost 1.9 billion users on its platform, and the company wants more users and more of their attention.
To give a boost to its video service in order to further increase engagement and ad revenue, Facebook is apparently in discussions with Major League Baseball (MLB) to live stream one game per week during the upcoming season. Lee Berke, a sports media consultant, said that Facebook was aggressively going after sports content, and that the strategy made perfect sense. (Source: “Exclusive: Facebook in talks to live stream one MLB game per week – sources,” Reuters, February 21, 2017.)
As the company gets more serious about its live video business, such deals could get users to spend more time on the social networking platform. This would mean more revenue for the company and more upside for FB stock.
At the start of this month, Facebook also signed a deal with Univision Communications Inc. to live stream Mexican soccer matches. The company secured rights to live stream 46 matches by Liga MX in 2017. Facebook stock will continue to gain as the social network tries to monetize live events and add more to its kitty.
Facebook Keeps Adding New Features
Meanwhile, Facebook has added the “Status” feature to its other popular property, “WhatsApp.” News came in on Monday that WhatsApp would get a new tool that would let users share videos, photos, and animated GIFs, all of which will disappear after 24 hours.
Similar to “Snapchat Stories” and “Instagram Stories,” WhatsApp’s ephemeral Status posts can be edited with text, emojis, and finger drawings. The users will have the option to send Status postings to all of their contacts or to specific ones. (Source: “WhatsApp Adds Snapchat-Like Story Feature Called Status,” The Wall Street Journal, February 20, 2017.)
The global reach and high user base of WhatsApp place it in a better position than Snapchat (owned by Snap Inc.). However, a WhatsApp product manager, Randall Sarafa, said that there were no plans to bring advertising to the messaging app.
Snap Inc. just made its video-recording “Spectacles” available online, and is betting on hardware to carve a space for itself away from Facebook. But, as covered by me earlier, Snap does not have a sustainable competitive advantage against Facebook.
The social media giant keeps lifting Snap’s popular features and adding them to its apps like Instagram, and now WhatsApp. Furthermore, Facebook has the scale and resources to make these features better for its users.
Last week, Facebook had also announced its entry into the job recruitment market. The social networking giant said that employers could directly post jobs to their “Page” and users will be able to apply for those jobs on Facebook. The company hopes that the employers and applicants can then continue their communication through “Messenger.” (Source: “Facebook is rolling out job postings and applications,” Recode, February 15, 2017.)
By not charging any fee from employers for job postings, Facebook is setting up a fight with a more established player in the field, LinkedIn Corp (NYSE:LNKD). Recruiters have to pay LinkedIn for posting and promoting jobs on its platform. In the short term, only a certain section of users may use this new Facebook feature but, in the long run, it could turn out to be a serious competitor to LinkedIn.
The following chart shows how Facebook stock has been climbing higher over the last two years. As the company gets ready to capitalize on the new opportunities, FB stock will likely continue its upward march.
Chart courtesy of StockCharts.com
Facebook Stock Has a Lot of Steam Left
The fourth-quarter and full-year 2016 results announced by Facebook on February 1, 2017 are an indication that the momentum of Facebook stock is not likely to slow down in 2017. User engagement remains high, which allows the company to enjoy high ad revenue.
Facebook is close to reaching two billion monthly active users by the middle of this year, which makes it a more lucrative platform for advertisers and sports leagues.
The big daddy of social media is not willing to age anytime soon. As FB stock crosses the $133.00 mark, investors have a lot to look forward to this year and, in all probability, they will not be disappointed.