Facebook: Getting the “Messaging” Across

There were several notable announcements made last week at Facebook’s (FB) virtual F8 Refresh developer conference. However, one development, says Evercore’s Mark Mahaney amounts to a “watershed moment for messaging.”

After October 2020’s launch of a closed beta for just 30 developers and 700 brands, Facebook announced that the Messenger API for Instagram would be “globally available for all developers.”

There are several “key implications” to this move, Mahaney says. These include “allowing businesses to integrate Instagram Messenger into all other existing communications platforms in a centralized way. Integrate Instagram Messenger into existing third-party CRMs, inventory management and analytics platforms, and access to a set of Automation Tools including: Ice Breaker, Quick Reply, Handover Protocol, Generic Template and Private Reply.”

These tools, the 5-star analyst says, will not only up the sophistication levels but also “simplify how businesses use Instagram as a marketing channel.”

Facebook also said that out of its 10 million+ active advertisers, 3 million are purchasing click-to-message ads that send users to Messenger to interact with their business.

“This is a much higher adoption rate than we had previously expected,” Mahaney noted.

Mahaney also came away newly confident that via Messaging, Facebook has the ability to “drive material revenue.”

The innovative work the company was doing in “layering Social Commerce tools inside Messaging,” was especially impressive, says the analyst.

For example, Mahaney notes an “anecdotal takeaway” made by FB customer Samsung which highlighted the growing number of product-specific inquiries, such as where to buy, product specs and pricing on their Instagram Messenger channel. In contrast, the other channels “were generally more customer support related.”

This indicates to Mahaney the continuous convergence between Social Commerce and Messaging product roadmaps, for which the analyst believes the end result will be “rising eCPMs (effective cost per mille).”

All in all, Mahaney reiterated an Outperform (i.e. Buy) rating on FB stock, whilst also sticking to a $400 price target. The analyst, therefore, expects shares will appreciate by ~20% in the year ahead. (To watch Mahaney’s track record, click here)

Looking at the consensus breakdown, Facebook’s Strong Buy consensus rating is based on 28 Buys, 4 Holds and 1 lone Sell. The forecast is for 12-month gains of ~16%, given the average price target clocks in at $385.69. (See Facebook stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.