Facebook Inc (FB) stock has been pretty darn solid of late, gaining 5% year-to-date compared to a 1% loss for the Nasdaq over the same time period. Zoom out, and the stock’s outperformance becomes even more dramatic.
While the Nasdaq’s losses are the same over the last 12 months, and while just about all stocks have been on quite a rollercoaster, Facebook stock has managed to soar a sweet 36%.
Mobile ads have been a large driver of Facebook stock’s success, but even that is the result of a broader evolution from the social media company.
As you likely remember, Facebook began solely as a social network with static profiles, added a news feed, added an algorithm and then added the timeline.
But more recently it has also added more of a focus on news, messaging and more — all meant to make the “social site” something far more ubiquitous to users.
That much was evident with the company’s latest announcement, which is related to its messaging service. Earlier this year, Facebook announced not just that more businesses would be using Facebook Messenger to communicate with their customers, but that the platform would also include bots. And this week, the bots made their debut.
The Wonders Bots Can Do for Facebook Stock
Some big names are on-board with this push already, including Bank of America Corp (BAC), Burger King, CNN and The Wall Street Journal. CNN’s bot delivers news on the fly, for instance, while a bot named Poncho will tell you the weather and even offer fun, daily weather reports if you agree to it.
There’s also a shopping bot available, while word on the street is that Facebook has been working partners like Uber so users could actually request a car through Facebook Messenger.
Add it up and one thing is clear: Facebook wants you to be the platform for … well … everything.
This kind of big-picture thinking and ongoing innovation is promising in and of itself for fans of FB stock. The tech world moves notoriously fast and Facebook’s ability to keep adding to its platform has fueled the stock’s success in recent years.
But a new and improved Facebook Messenger also adds some more tangible upside to Facebook stock. Analysts are optimistic that bots can monetize easily — as am I.
One way is with an e-commerce tie-in — a sort of “app store for B2C interaction,” as one analyst told Barron’s. There’s also the possibility of advertising within Facebook Messenger — which sounds terrible from a user perspective, but is par for the course and very promising from a FB business perspective.
And perhaps most promising of all is the possibility of Facebook Payments for the aforementioned e-commerce — a space that’s sizzling.
But no matter which path the bots take, they’re a clear step to Facebook becoming an even more widespread platform. That means more engagement from existing users, the possibility to add even more users, plus more opportunities to monetize all users.
Cantor Fitzgerald analyst Youssef Squali summed it up the best, writing:
“We believe management is building Messenger into a “portal”, which will create an ecosystem that keeps its massive user base within its walls, engaged whether these users are communicating with friends and family, consuming content, communicating with businesses or transacting (preferably doing all four!).”
The only thing that might sum it up better is his $140 price target, which represents nearly 30% upside even after Facebook’s stellar run.
I’m equally bullish; the bots are just the cherry on top for Facebook stock.
Hilary Kramer is the editor of GameChangers, Breakout Stocks Under $10, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
