Analyst: Huge Upside for Facebook Stock
Facebook Inc (NASDAQ:FB) really wants to make its “Messenger” platform the only app you ever use on your mobile device. What Facebook is planning next for the messaging service could turn out to be an app killer—and that could mean big things for Facebook stock.
Two years ago, Facebook forced its mobile users to download Messenger as a separate app if they wanted to chat directly with their Facebook friends. Since then, Facebook has added stickers, apps, and games that users can purchase to the app; friends can even send money between each other via Messenger.
The move has allowed Facebook to monetize its users beyond newsfeeds, but so far, it barely scratches the surface when it comes to Facebook’s revenue. It’s nowhere near a catalyst yet for FB stock.
But that might be about to change, as it looks like Facebook has big plans for Messenger.
And why not? Messenger has 900 million monthly active users (MAUs), which makes it the second most popular app, just behind “WhatsApp,” which Facebook also owns. (Source: “Facebook Welcomes ‘Chat Bots’ to Its Messenger App” Fortune, April 12, 2016.) The platform is an incredible opportunity for Facebook to monetize.
A couple of weeks ago, source code uncovered by “The Information” revealed certain commands in the latest version of the Messenger app, including “pay in person,” “pay directly in Messenger when you pick up the item,” and “no cash needed.” (Source: “Facebook Messenger is reportedly taking on Apple Pay and Samsung Pay,” VentureBeat, April 1, 2016.) The feature would assumedly let users pay for an item in retail stores using Messenger in the same manner as they would use “Apple Pay” or “Samsung Pay.”
Back in December, Facebook announced that it has partnered with Uber to create a new transportation platform within the Messenger app. That means that users can now use the app to hail a ride and you don’t need the Uber app installed on the mobile device to do it (meaning one less app taking up space on users’ devices).
Then last week, Facebook announced that the latest version of Messenger allows businesses to create “chat bots” to interact with their users. Users can access these chat bots by typing in the name of a business in the search bar of the Messenger app and hitting the message icon and initiating a conversation.
After the user sends the first message, the chat bot will reply right away. Users will be able to ask for the weather, get the latest news headlines, order a pizza, and shop for clothes, among many other tasks. Among some of the companies that already have a chat bot or about to launch one are the The Wall Street Journal, CNN, Spring, Sephora, and H&M.
Facebook didn’t introduce any new ad products within the Messenger app itself, but it did announce a newsfeed ad product that, when clicked on, connects the user to the company’s chat bot.
Chat bots will provide another way for businesses to interact with their customers; this is the key to monetizing Messenger. As more businesses and users start using chat bots, Facebook will find more opportunities to monetize those interactions.
The Bottom Line on Facebook Stock
Chat bots also have the potential to supplant app stores, such as Apple Inc.’s (NASDAQ:AAPL) “App Store” and Alphabet Inc’s (NASDAQ:GOOG) “Google Play.” If chat bots really take off with users, there won’t be a need to open another app—and that will be good news for FB stock.
Facebook is attempting to turn Messenger into a one-stop shop. If it catches on with users, chat bots could be a major catalyst for Facebook stock down the road.