Barclays released a note on Facebook Inc’s stock on Wednesday, saying the value of the company’s shares is expected to rise over the next couple of years. The positive projections respond to the recent release of Facebook Stories.
The feature is the latest to replicate Snapchat’s Stories. Snap Inc’s platform is Facebook’s main competitor on social media, and it is also registering skyrocketing growth, particularly after holding its IPO a couple of months ago.
Mark Zuckerberg’s company is also set to thrive even more thanks to a paradigm shift in its business model. Reshaping Facebook to become more content-oriented by featuring videos will pay off in the long run according to analysts.
The “golden age of mobile” will make Facebook grow
Barclays analyst Ross Sandler believes the next three to five years will mark the “golden age of mobile.” Facebook’s huge presence on mobile devices both through its main platform and subsidiary apps will serve them well to take advantage of the bonanza.
He says the tech sector will finally make the jump from desktop and portable computers to full-fledged mobile devices. That shift has already begun, and it is quite prominent nowadays, particularly with the performance increase in smartphones and tablets.
Barclays gave the social media giant an “Overweight” rating in the stock market. It also predicted a 9.5% growth in value, equivalent to a potential $154 price point per share.
Videos on Facebook will be the ones to bring profit
Facebook’s shift from social media platform to video-sharing feed will be sort of hard to assimilate at first, but it will bring significant revenue on the long run. The move will involve more user engagement and more space for ads.
By focusing on videos, the company is essentially turning the platform into a lobby on which users will spend more time. In fact, YouTube’s “ad crisis” gives Facebook the perfect opportunity to snatch some advertising clients from Google.
The mobile advertising market has huge potential for growth, registering $27 billion in revenue in 2016 alone between Facebook, Google, and other social hangouts like Instagram.
By 2020, Facebook’s profits alone will exceed that number, reaching $27.9 billion of $66 billion in total. Services like Facebook Messenger and WhatsApp are expected to become a secondary source of income for the social giant, turning modest figures above the $10 billion mark in that same year.
Source: Business Insider
