Facebook is a growing position of mine. A few things…
1) The monetization of Whatsapp:
This Motley Fool article explained how Facebook might integrate the business-to-consumer messaging it plans for Whatsapp fairly in depth and helped me understand the model they are going for a little bit better:
When Facebook introduced Businesses on Messenger at F8, it cited possible uses for the app including answering customer questions during the online checkout flow or receiving status updates on a shipment. It could also be used to stay in touch with purchasers after they receive the item, to receive more in-depth feedback on the shopping and product experience. The addition of payments on Messenger opens the door for conducting commerce on the platform down the road, and it wouldn’t be too surprising to see similar payments functionality come to WhatsApp.
All in all, business-to-consumer messaging coupled with payments capabilities has proven a successful formula for profitable messaging apps. After WhatsApp lost $232.5 million (on paper) in the first half of 2014, Facebook needs to show that it can turn its huge investment profitable.
I found this pretty helpful. So basically, the plan is for Whatsapp to be a one stop place for everything in the business-to-consumer model, right? Want to order and pay for a product? Check. Want to ask a customer representative a question about assembling the product or installing it? Check. Want to inquire about the shipping status of an order? Check. Want to leave feedback to the business? Check.
Remember domestic payments (including P2P) is already available on Facebook and international payments are only a matter of time.
Steep price but definitely lots of potential here as Whatsapp is quickly approaching 1 billion users.
2) Instagram: $1 billion is a steal for the social media medium featuring 300 million MAUs and the social media of choice for advertisers’ holy grail: rich kids.
CromulentBrad posted some impressive Instagram numbers the other day on Facebook’s board and I hope he doesn’t mind if I post them here:
300 million monthly active users
75 million daily users
20% of global internet users between 16-64 have an Instagram account
23% of all teens consider Instagram their favorite network
Instagram is an advertiser’s dream come true. Never before have you had this many kids (most of them “well off”) that are so engaged with a medium.
3) Facebook Messenger: Facebook recently announced it wwishes to bring games to Facebook Messenger. What will the future look like for Messenger?
Facebook’s long-term goal is for Messenger to evolve into a monolithic chat app like Tencent’s WeChat (known as Weixin in China), which has 549 million active users. Last year, Tencent let retailers set up “mini shops” within the app and launched a “Game Center” for in-app installations of games. Last quarter, Tencent reported that gaming revenue from WeChat and its other chat platform, QQ, boosted its online gaming revenue by 28% annually to $2.15 billion.
If Facebook can mimic Tencent’s WeChat strategy, it could monetize Messenger’s massive user base. The Messenger app would be used for chat, payment, gaming, and e-commerce services, just as the main Facebook app is used for photos, videos, status updates, and sharing links.
4) Oculus: As far as Oculus goes, I can only point to potential, not users or subscribers or advertisers. But the possibilities sound pretty awesome:
You’re in your chair at home, the latest Oculus VR headset encircling your head, and you use its voice recognition feature to access Facebook.
Facebook’s virtual reality newsfeed appears in front of you — a three-dimensional, horizontally-scrolling wall of cards. Each card contains a virtual experience, and much like the auto-playing videos in Facebook’s newsfeed today, each of them offers a few moments of the experience on a loop.
The first card is from one friend, who uploaded a video (filmed with a consumer-friendly VR camera) featuring her three-year-old daughter and the family dog chasing each other in circles. It’s cute… and not what you’re looking for.
Instead of using a mouse or a finger-swipe to scroll through a flat, one-dimensional newsfeed, you lift your arm and make a swiping gesture to the left.
The next experience in the queue is from your best friend, who uploaded a clip taken from his video-drone’s flight over Manhattan at dusk.
With the drone’s multiple cameras capturing three dimensional space and the VR editing software that came preinstalled on Apple’s latest desktop devices, you’re witnessing a virtual experience of the most awe-inspiring parts of its journey.
Missed a family reunion or wedding or other important event? Now you can relive it as if you were there when your friends/family members post it on Facebook. Or experience sailing with your friend or racing a car or anything else one of your Facebook friends post.
Now obviously not all of these plans Facebook has might pan out. I get that. And while I think Oculus and Instagram were not that expensive for the potential rewards they bring, Whatsapp definitely was pricey. But I just wanted to point out Zuckerberg and his crew have detailed plans for everything they’ve purchased. They’re not just paying big bucks for a random assortment of popular web platforms and technologies. I believe Facebook is a great stock to own right now.