- Facebook Shares Surge After Zuckerberg Announces Facebook Shops
Shares of Facebook rose by 6.4 percent to a record-high of $230.75 on Wednesday after the company’s CEO and Co-Founder, Mark Zuckerberg announced Facebook Shops on Tuesday.
According to Zuckerberg, Facebook Shops will allow businesses to list products on their Facebook Page, Instagram Profile, Stories or in ads for free. In the future, the company plans to also allow businesses to sell products to customers through WhatsApp, Messenger and Instagram Direct.
The CEO explained that businesses will also be able to tag products during Facebook and Instagram live streams.
“It’s one simple and consistent experience across this family of apps, which means it is easier for people,” Zuckerberg said in a live stream on Facebook. “That of course means there’ll be higher conversions and more sales for small businesses.”
On Wednesday, the company’s shares jumped to an all-time high of $230.75 as investors immediately embraced the e-commerce initiative and predicted that it could add as much as $30 billion to Facebook revenue going forward.
Facebook shares moderated slightly to $229.97 as at the time of writing this report.
“We think Facebook Shop in a simplistic bull case could drive up to as much as a $30 [billion] revenue opportunity, across a combination of take-rate driven transactional and advertising revenue,” the analysts stated.
Similarly, AB Bernstein, in a note to clients on Wednesday, said the new Facebook Shops could open a $1.3 trillion market.
“We have long viewed FB as the ‘rent’ to the digital economy and a core component of the online retail ecosystem,” the analysts wrote.
“Our business model here is ads, so rather than charge businesses for Shops, we know that if Shops are valuable for businesses they’re going to in general want to bid more for ads,” Zuckerberg said. “We’ll eventually make money that way.”
