First, it was Instagram Stories. Then it was WhatsApp Status. Now it’s Messenger Day. With each copycat iteration, the chorus of bearish arguments against FB stock gets louder and louder. They are all pretty similar, and they go something like: “Facebook is playing catch-up” or “Facebook isn’t innovating” or “Snap will steal Facebook’s users.”
The market doesn’t seem to be giving those arguments much credence. Facebook stock is up 13% since Instagram Stories launched and is currently at all-time highs. SNAP stock, meanwhile, is 25% off its post-IPO high and continues to make new lows.
I think the market has it right on this one. Here’s why.
Facebook Stole Snap’s Thunder
One thing Apple Inc. (NASDAQ:AAPL) taught the technology world is that you don’t need to be first to market to succeed. The iPhone was far from the first smartphone to market. Apple let other companies introduce the concept and dabble in prototypes, then Apple leaped on the opportunity when the time was right.
In other words, you don’t have to be first. You just have to be better and have the right timing.
Facebook is bigger, and in the social media world, that is better. The timing is also right for Facebook to be playing copycat.
Scale is what has driven profits and driven FB stock higher. The entire Facebook ecosystem has tremendous scale. The main Facebook app has scale. Messenger has scale. Instagram has scale. WhatsApp has scale. This pervasive scale offers two advantages:
- Firstly, scale will convert Snap Story users into Facebook users. As this Mashable writer points out, there is a certain broadcasting element to Snap and Instagram Stories. When you blast a picture or video out on social media for 24 hours, you do so with the intent of grabbing as many eyeballs as possible. Snap only has so many eyeballs. Instagram has more than two times as many eyeballs. Messenger has more than six times, and WhatsApp more than seven times.
- Secondly, scale will allow FB to grab users before they ever even migrate to Snap. Instagram Stories just rolled out internationally, where Snap only has some 90 million daily active users. Messenger and WhatsApp also have large international reach. As Instagram Stories, WhatsApp Status, and Messenger Day launch globally, it will be the first time many of their users have seen the “Stories” concept. To them, there is no copying or mimicking at work. Just a cool new feature on a favorite platform.
The timing of Facebook’s “imitation game” has also been pretty close to perfect.