So far, Facebook (FB) has had a pretty good year. And, given its recent spate of news, it looks like 2016 and beyond should continue to keep this social network juggernaut expanding.
Well, perhaps not expanding its audience as much as deepening its experience. There are only so many people on the planet that FB can get to use its site.
The goal has been to keep them there as long as possible. By “enriching” the users’ experience, it gives FB — and more importantly, its advertisers — more places and time to reach out to members.
This is exactly why investors were excited about FB stock when it was in its growth phase. Having a vibrant audience that was in a Facebook channel numerous times every day could be monetized.
Early attempts did not turn out as brightly as FB had hoped. Simply posting ads on the site alongside users’ posts wasn’t very effective, and advertisers were not interested in spending precious ad dollars for less-than-spectacular returns.
Facebook Stock Has a Bright Future
But now, as FB has matured (as has its audience) there are clear signs that management is finding more effective channels for advertisers, and continuing to seek new ways to boost the amount of time users spend on Facebook properties.
For example, FB is testing a shopping feed within its mobile app. Based on a user’s connections, likes, and interests, the app displays a list of products highlighted by businesses on their own Facebook pages. “Buy” buttons have already been built into the site, allowing users to shop without leaving FB. There are also mobile storefronts inside FB where people can shop as well.
Facebook is also set to begin testing a dedicated video channel that would rival YouTube, where users could save and share their favorite videos. And, as evidenced by YouTube’s iconic success, a popular video-sharing destination can generate revenue for FB stock, plus act as a new way to share revenue with video creators, which should spur content.
The biggest news of late is the fallout from a recent statement by Facebook’s Director of Global Platform Partnerships, Julien Codornieu. He said that Messenger, Facebook’s SMS-style chat service — is only 1% finished.
The goal is to make Messenger a platform on which people can build an entire business. You can order food, make payments, and use it as a B2C communications outlet.
Bottom Line on FB Stock
Simply put, a fully-realized (or even partially-realized) Messenger could turn the app world upside down and create a significant headache for Alphabet (GOOG) and Apple (AAPL), both of which rely on apps for a significant source of revenue.
All of this follows news that sister site Instagram is still growing like kudzu. In late September, the site announced it has over 400 million monthly active users — that’s more than Twitter (TWTR). And, unlike TWTR, it’s still growing. Instagram added its latest 100 million users in just the past 9 months.
This year, research group eMarketer expects Instagram to generate $600 million in ad revenue, and soar to $1.48 billion — a 146% increase — in 2016. It also predicts that Instagram will make up 17% of Facebook stock revenue by 2017.
It would seem, then, that FB is just now hitting its stride.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
