Facebook Inc. (FB) is one of the few companies that played a massive role in the decade-long bull market that started during the fallout of the global financial crisis. Since its IPO in 2012, shares have gained a staggering 526% and its financial performance has improved every year since its IPO. The company is relentlessly pursuing growth opportunities in both domestic and international markets, and the deceleration of company growth seems a distant reality.
The promising outlook has prompted Goldman Sachs analyst Heather Bellini to boost the target price from $220 per share to $250, which indicates approximately 5% upside from the current market price of around $238. The upside, however, is likely to be much larger considering Facebook’s recent investments.
In a bid to monetize WhatsApp’s 400 million users in India, Facebook invested $5.7 billion in Reliance’s Jio Mobile which is the largest telecommunications services provider in the country.
The company is likely to develop WhatsApp as an all-in-one social messaging platform such as WeChat in China by enabling users to purchase and pay for products on the platform itself. WhatsApp Pay was launched in India as a pilot project in 2018 and it could soon go mainstream. This will pave the way for the company to generate billions of dollars in the future as the fintech industry evolves.
At the time of completing this investment, Facebook wrote in a press release, “India is in the midst of one of the most dynamic social and economic transformations the world has ever seen, driven by the rapid adoption of digital technologies. In just the past five years, more than 560 million people in India have gained access to the internet.” It only makes sense for Facebook to target this high-growth market.
Facebook Shops was launched last month to support small businesses go online amid the favorable outlook for the e-commerce industry. Facebook will face it off with the likes of Shopify Inc. (SHOP) to gain market share in this booming industry, and with over a billion daily active users on the platform, it would only be a matter of time until the company gains traction in the e-commerce market with Facebook Shops.
Messenger Rooms is another recently launched feature by Facebook to tap into the lucrative video conferencing industry.
The Stock Will Continue To Rally
Facebook does not have any long-term debt, and its cash balance stood at $60 billion at the end of the first quarter this year. This strong liquidity position will not only help Facebook invest billions of dollars to secure long-term growth but will also help the company reward shareholders through stock repurchases. As Facebook captures new markets and establishes itself as a leader in many industries such as e-commerce, video conferencing, and mobile payments, the market value of the company will eventually follow earnings, leading to substantial investment returns.
This article was originally posted on FX Empire