Analyst community sees Facebook making billions with its FaceCoin

  • By Tom Cleveland

  • March 20, 2019
  • 1:16 am BST

If you worked for Facebook, would you recommend that they utilize cryptos to enable payments between their 2.3 billion active user base, if you knew that the service could earn $19 billion by 2021? Sounds like a “Slam Dunk”, as they say, or “No brainer”, if you prefer that phrase. Ross Sandler, an Internet analyst with Barclays, recently issued this prognostication, after taking what few details were available and assessing what the potential impact could be on shareholder value of the social media giant going forward.

Details continue to surface related to Facebook’s intended exploits in the crypto space, although the firm has not been that forthcoming. We began reporting back in December: “In May, the firm re-assigned David Marcus, PayPal’s former president and current leader of Facebook’s Messenger service. Marcus, an avid supporter of cryptocurrencies, subsequently departed the board of Coinbase, citing potential conflicts of interest. The word on the street is that he has already formed a unit of blockchain developers, now totaling at least forty individuals. The obvious choice of a payment service to enable “P2P” transfers had been rumored since May.”

The next domino to drop suggested that Facebook was indeed looking at a potential “P2P” and cross-border payment service: “Bloomberg and the New York Times have both reported that this FaceCoin will appear later in 2019 and will take advantage of the global exposure of the WhatsApp messenger service. Suddenly, cross-border payments could be made instantly, not suffer delays of 48 hours or more. The cross-border remittance market is an obvious target for Facebook with its global footprint and the fact that it is a $500 billion business, dominated by banks and a host of private quasi-bank remittance companies.”

The news today is that an analyst with Barclays has sharpened his pencil, designed a spreadsheet for analysis, and then forecasted the range of revenue possibilities that such a payment service could generate for Facebook. Assuming everything fell into place, and that is a big “if”, Sandler’s numerical musings point to a healthy range of $3 billion to as high as $19 billion in new revenues for the social media giant in 2021. If you are a true believer, then you might want to consider buying FB stock at this juncture, but we are only speculating, not giving any investment advice.

According to Sandler: “Based on our checks, the first version of Facebook Coin may be a single purpose coin for micro-payments and domestic p2p money transfer (in-country), very similar to the original credits from 2010 and Venmo today.”

Facebook is not new to the payment scene. Its previous attempts have not exactly been barnburners. Facebook Credits fell flat and was terminated after two years. Facebook Gifts was another attempt, but another no-go, too. Facebook Messenger Payments was initiated in 2015 and has been moved about, searching for a home and user base, while re-branding was of little help. The difference now, however, is that blockchain technology and a stablecoin approach may overcome many previous obstacles, as long as users find it convenient and easy to convert to local fiat currency.

There are also regulatory issues, which have confounded every startup’s attempt to wrestle market share away from the entrenched banking establishment. Facebook has scale and influence. If there is an entity that could pull off this “miracle” waiting to happen, it would be FB. Its bold presence may be enough to forge whatever partnering arrangements are necessary with local organizations and mobile hub operators, which should be interesting to observe.

And so the race is own with the prize set at $19 billion, quite a payoff, if it can be done. FaceCoin has the potential of becoming as ubiquitous as Gold and of dragging the crypto community to a higher level of awareness and acceptance in one fell swoop. Only time will tell.