Here’s what major analysts are saying about Facebook’s possible cryptocurrency launch on Tuesday
Article Published by: cnbc.com
Wall Street analysts are eagerly anticipating Facebook’s possible unveil of its long awaited cryptocurrency payments plan on Tuesday. According to various reports the company is preparing to finally reveal what it calls, Project Libra, with partners including companies like Visa and Mastercard.
Facebook is the best performing of the so called “FAANG” stocks this year and is up over 40% year to date. “FAANG” refers to a group of tech and internet stocks which includes Facebook, Amazon, Apple, Netflix, and Google.
The social media giant has also been under tremendous pressure from government regulators due to various privacy issues and most analysts think the crypto project may gave the company a big lift in more ways than one.
“We believe this may prove to be one of the most important initiatives in the history of the company to unlock new engagement and revenue streams, ” RBC analyst Mark Mahaney said.
Other analysts agreed.
“We believe this is a major initiative for Facebook, and one that has the potential of putting the company front and center in areas beyond advertising, including commerce and financial services, materially expanding its total addressable market and growth prospects,” analysts at SunTrust said. “It reduces the potential for regulatory scrutiny and opposition on anti-trust grounds (especially in the current environment), given Facebook’s consortium approach and the varied nature of the partners.”
Facebook is not just looking to be a player in the social media space either, according to analysts at MoffettNathanson.
“Facebook has its eyes set on becoming the world’s leading ecommerce platform as well,” they said.
Here’s what else the analysts are saying about Facebook’s crypto launch:
SunTrust- Buy rating
“We believe this is a major initiative for Facebook, and one that has the potential of putting the company front and center in areas beyond advertising, including commerce and financial services, materially expanding its TAM and growth prospects…It positions the company as one of the key actors at the center of the crypto currency development, and a main architect of the future of this emerging and important trend. While crypto currencies have existed for several years now, no other company could bring the combination of user scale, brand support and balance sheet, which Facebook can in our opinion…It reduces the potential for regulatory scrutiny and opposition on anti-trust grounds (especially in the current environment), given Facebook’s consortium approach and the varied nature of the partners.”
MoffettNathanson- Buy rating
“We believe a Facebook cryptocurrency-based payments system could be especially useful in countries with high inflation/unstable banking systems and for cross-country remittances. So, Facebook’s commerce ambitions do not appear to be limited to developed markets. Rather, Facebook has its eyes set on becoming the world’s leading ecommerce platform as well.”
RBC- Outperform rating
“We believe this may prove to be one of the most important initiatives in the history of the company to unlock new engagement and revenue streams, and we plan to provide an analysis of the White Paper to help investors analyze the underlying cryptoeconomics of the token. We believe Facebook will use crypto to facilitate a platform for: 1) Payments; 2) Commerce; and 3) Applications & Gaming. And we believe this strategy is a multi-step process, starting with a focus on user engagement through messaging and leading to further monetization with each subsequent, deeper step – a similar strategy that has worked well for Facebook’s Core Advertising business.”
Bank of America- Buy rating
“With more than 2.5 billion users, Facebook and its partners could be a significant endorsement of cryptocurrency and a notable addition to the Facebook app ecosystem. Although many questions remain on ease of use and potential adoption as there are very viable online payment alternatives in place, the consortium will likely get significant press/visibility and could be a medium-term catalyst for eCommerce activity on Facebook. We see the launch as an important initiative for the company as it builds out a more private messaging ecosystem with eCommerce capabilities.”
About Jaime Bonetti Zeller
Jaime Bonetti Zeller is an investment professional and entrepreneur with businesses in multiple industries. He is president of Servicios Consulares Eurodom, the local partner in the Caribbean region for VFS Global, a leader global outsourcing and technology services specialist for diplomatic missions and governments worldwide. Jaime Bonetti Zeller also started the company Sofratesa de Panama inc., an organization in the engineering services industry located in Panama City.