Analysts are Already Buzzing about Facebook’s Cryptocurrency Plans

It’s been no secret on Wall Street that social media giant Facebook has cryptocurrency plans.

Many are anticipating the company’s launch of a cryptocurrency platform and according to reports, Project Libra is expected to be revealed soon.

Several analysts have chimed in with what they think about the launch including RBC analyst Mark Mahaney who has said, “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.”

“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,” said SunTrust analysts.

They added, “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 has its eyes set on becoming the world’s leading ecommerce platform as well,” remarked MoffettNathanson, which has a “buy” rating on the stock. The firm also added, “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.”

Suntrust, which also has a “buy” rating on Facebook also said, “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.”

RBC has an outperform rating on the stock and has also commented, “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 American, also with a “buy” rating stated, “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.”

Citi has said, “Multiple reports suggest that Facebook will unveil details of its cryptocurrency effort (dubbed Libra) tomorrow morning via the publication of a whitepaper. The reports suggest that Facebook’s Libra initiative could be one of the most well organized efforts by a global consumer tech company yet. The currency could have a variety of applications, from P2P money transfer to merchant shopping (including on Instagram Shopping and Facebook Marketplace). As Zuckerberg said at this year’s F8, “sending money should be as easy as sending someone a photo.” Libra could introduce a meaningful new product and profit stream for FB over the coming years. That said, the regulatory framework for cryptocurrencies remains uncertain, and Libra will also be an important test for how well Facebook has been able to (or will be able to) overcome the recent questions about its trustworthiness.”

Disclaimer: We have no position in Facebook, Inc. Common Stock (NASDAQ: FB) and have not been compensated for this article.