Given its need to grow profits every year, Facebook (NASDAQ:FB) has pushed bravely into the world of cryptocurrencies with Libra, a stablecoin many analysts believe could empower billions of people who don’t use traditional financial services. This could help provide FB with a new stream of cash flow that would diversify it from the ad market.
Initially met with great fanfare, it seems that Libra is more trouble than it’s worth. Governments around the world have expressed reservations about it, complaining that the stablecoin could impact the stability of the global financial system without proper regulation. Even Congress has expressed reservations, asking for more information on how Facebook will handle the privacy and national security concerns that might arise.
Though additional revenue and cash flow are always nice, government scrutiny and the subsequent potential regulations could cost Facebook more than it makes from Libra.
Fortunately for investors of the social network, Facebook has numerous other ways of making money off its 2.7 billion users. Here are three ways FB stock could surge without drawing too much ire from regulators.
FB Gain Market Share in E-commerce
Although Facebook Marketplace hasn’t done as well as some bulls expected, Mark Zuckerberg isn’t giving up. According to the Verge, Facebook’s Instagram division is working on a standalone app designed solely for shopping.
Instagram has tens of millions of businesses that have Instagram accounts, and around 80% of Instagram users already follow at least one business. By connecting users to businesses and potentially providing tools for merchants, Facebook could challenge Shopify (NYSE:SHOP) and even Amazon (NASDAQ:AMZN).
Facebook Gain Market Share in Streaming
According to Forbes, over half a billion people watch video on Facebook every day. If Facebook provides premium content alongside the free user-generated content, Facebook stock could potentially reap big benefits.
In terms of its premium video strategy, Facebook seems to have prioritized sports broadcasts that foster connectivity and build communities. Internationally, the company bid unsuccessfully for streaming rights for Indian Premier League cricket, but was successful in gaining the streaming rights to the Spainish La Liga soccer league.
In the United States, Facebook has shown some MLB games. Given its actions in recent years, it seems that Facebook is dipping its toes into the water and trying to see what connects with its audience profitably and what doesn’t. Once the company figures out the right live broadcast strategy, look for streaming to make a bigger difference in Facebook’s bottom line.
FB Makes Hit Product in Virtual or Augmented Reality
Although Facebook bought Oculus five years ago for $2 billion in hopes of capturing a big market, FB has failed to make a blockbuster product in the category. Cash flow generated from Oculus hasn’t made much of a difference in Facebook’s overall performance.
Yet the potential is still there. Virtual reality and augmented reality glasses certainly have the potential to be big. Given its nearly unrivaled ability to market to people and its world class workforce, Facebook could one day make the iPhone of virtual reality or augmented reality. Needless to say, this would be good for Facebook stock.
FB Isn’t Dependent on Libra
Although Libra might not contribute as much as previously hoped due to government resistance, Facebook has plenty of other ways of making money from its billions of users. Facebook’s e-commerce, video streaming, and VR/AR hardware efforts could help the company grow its profits and be beneficial to FB stock in the future.
As of this writing, Jay Yao did not hold a position in any of the aforementioned securities.
