Facebook Inc (FB) Home, Graph Search, Gifts Or Instagram?

According to comScore, Facebook leads the way with the top app audience ranking in terms of engagement on mobile apps. Instagram accounts for 3% of all time spent on apps and Facebook accounts for ~23% time spent on apps. It is widely expected that advertisements on Instagram are right around the corner for Facebook Inc (NASDAQ:FB). And with global smartphone penetration rapidly rising, it wouldn’t be surprising at all to see Instagram grow its current user base by 2x-3x in the next few years. As Instagram has become very popular on its own rights, the monetization opportunities from the app are reasonably high.

4. Gifts and e-Commerce

Facebook’s Gifts initiative hasn’t gotten off the ground yet. But the company’s user base of more than 1.1 billion and small business pages of more than 16 million allows the company to pursue newer business opportunities especially on the e-Commerce side. Once Facebook manages to sign up more merchants on its platform, it can potentially turn into a marketplaces business like eBay Inc (NASDAQ:EBAY).

The world’s largest online marketplace, eBay Inc (NASDAQ:EBAY) was responsible for enabling roughly $49 billion worth of transactions in the last quarter, and eBay Inc (NASDAQ:EBAY)’s portion of the revenues (i.e. the take rate) was 7.7%. Facebook can transform the Gifts business into a potential Marketplaces business as the company already knows a lot about the personal information and likes etc. of its users. Facebook can earn a lot of revenues from this model via a take-rate model in line with eBay.

The takeaway

The CEO is very keen to invest in the company’s major growth opportunities to deliver products at scale including Home and Graph Search and the company is in pole position to do so, relative to competitors. And Mark Zuckerberg is fully focused on delivering on these big investments of the company. The company doesn’t generate much revenue from each of these potential revenue streams. However, Facebook is steadily positioning itself very well to maximize long term returns for investors.

shfaque Faruk has no position in any stocks mentioned. The Motley Fool recommends eBay, Facebook, and Google. The Motley Fool owns shares of eBay, Facebook, Google, and Microsoft.