Tag Archives: pypl

Facebook Revs Engine On Multibillion-Dollar Market Opportunities

A series of announcements by Facebook ( FB ) at its conference for developers this week puts the company on a solid path toward adding billions to its revenue stream. CEO Mark Zuckerberg set a 10-year strategy for Facebook on Tuesday that emphasized pushing its Messenger chat platform deeper into the business world with chatbots and by enhancing Live video with virtual reality. Zuckerberg presented his vision in a keynote speech at the start of Facebook’s two-day F8 Developer Conference on Tuesday in San Francisco. Analysts say the monetization strategy of Messenger will closely follow that of Instagram, with both platforms seen becoming multibillion-dollar businesses. That will be followed by its Oculus Rift virtual reality business and its WhatsApp messaging platform. “We see Facebook’s revenue growth visibility being enhanced by Instagram this year, Messenger in 2017, and more mass-market virtual reality and maybe WhatsApp by 2018,” wrote Rosenblatt Securities analyst Martin Pyykkonen in a research note Wednesday. He estimates Instagram’s ad revenue will reach $1 billion this year. “It’s still very early, but Messenger could become that single app interface for multiple mobile payments and be a competitive issue for the likes of PayPal ( PYPL ), Square ( SQ ) and credit card companies,” he wrote. Cowen analyst John Blackledge wrote in a research note that, given Messenger’s sheer user scale, it could potentially be another transformational platform for Facebook. Messenger has 900 million users, up from 800 million in January. “Facebook will continue to follow its proven playbook of building great products, achieving scale and then building ecosystems around those products/apps in order to monetize,” Blackledge wrote. Facebook Messenger Can Be Added Feature For Ads Facebook provided a glimpse as to how it might monetize Messenger at the F8 conference. Examples included businesses placing an ad on Facebook and then, when the ad is clicked, the user is taken over to Messenger, where that user can communicate with the company and transact on the platform. As widely expected, Zuckerberg announced a program for developers to write apps that are powered by artificial intelligence, known as chatbots. The digital assistants will help Messenger users communicate with businesses for services, perhaps to fix a problem or to buy goods. Demonstrations on how bots will be used by businesses included ordering flowers through the chatbot of 1-800-Flowers ( FLWS ). Facebook highlighted over 40 existing partnerships that included Shopify ( SHOP ) and Hyatt Hotels ( H ). While ads and promotions are not currently allowed in the bot platform, Facebook has begun testing “Sponsored Messages” in small groups. Facebook also said it will be able to earn revenue through “Click to Message” links in News Feed ads. Another major focus at the F8 conference is on live video streaming, which generates 10 times more comments than regular videos. Facebook is already pumping up revenue from standard video ads placed on its website. The addition of Facebook Live video will accelerate that opportunity. Blackledge estimates Facebook video revenue will hit $10 billion by 2021, up from $1.8 billion last year. Facebook Live is comparable to the Twitter ( TWTR ) Periscope app, which launched last year and has logged more than 100 million broadcasts. Twitter has integrated Periscope into the Twitter app feed. The vast majority of Facebook revenue comes from ads on its main website, but the company is looking to build on that with Instagram, Messenger and Live. “Messenger is clearly increasingly important, in our view, but its vision of the post-app world will be a challenge to pull off,” wrote Pacific Crest Securities analyst Evan Wilson in a research note. “It has a real opportunity with Live video in the near term.” Facebook stock was down more than 2%, near 108, in early afternoon trading in the stock market today . Facebook is set to report Q1 earnings after the market close on April 27. Analysts expect revenue will rise 48% from the year-earlier quarter to $5.25 billion, while earnings per share minus items also are expected to rise 48%, to 62 cents.

VC Fundraising Hits 10-Year High Despite Startup Doubts

Venture capital firms raised $12 billion in the first quarter — the largest amount in 10 years and double the amount raised in the previous two quarters combined — despite growing doubts about startup valuations. The amount raised is a promising sign for entrepreneurs and startups that rely on venture capital funding to launch their companies and expand. The $12 billion was up 59% year over year and more than double that of the previous quarter, said the National Venture Capital Association, which reported numbers tallied by Thomson Reuters. It was the most raised in a quarter since $14.3 billion in Q2 2006. “While it’s unlikely for this strong pace to continue, we do expect this to be a solid fundraising year when all is said and done,” said Bobby Franklin, CEO of the National Venture Capital Association, in a statement. Investors in venture capital funds include pension funds, endowments, insurers, banks, corporations and rich individuals hoping to get above-average returns on their investments. Venture capital firms receive annual management fees as they invest in startups. The funded portfolios are typically active for about 7 to 10 years until profit is distributed to the portfolio investors. Venture capital firms also keep a percentage of the gains. The funding provided to venture capital firms comes even as the value of some highly valued startups has declined and as the market for initial public offerings has cooled. But the overall rate of return from VC portfolios is better than what it might seem. The 10-year return by venture funds for the period ended Sept. 30 was 11% versus 6.8% for the S&P 500 index and 7.9% for the Nasdaq composite, according to Cambridge Associates, a provider of investment advice and research. The largest recipient of funds in Q1 was Founders Fund VI portfolio, which raised $1.3 billion. The Founders Fund venture capital firm was launched by Peter Thiel, a founder of PayPal ( PYPL ) and an early investor in Facebook ( FB ). Founders Fund is an investor in SpaceX, which has a multi-billion dollar contract to resupply the International Space Station. SpaceX also has numerous contracts for the launching of satellites. Founders Fund is also an investor in accommodations listing provider Airbnb and music streaming service provider Spotify. The second- and third-largest funding amounts, both receiving $1.2 billion, went to Norwest Venture Partners XIII and Accel Growth Fund IV.

Here’s How PayPal Hooked Rising E-Tail Startup Jet.com

PayPal ( PYPL ) subsidiary Braintree managed to nab e-tail startup Jet.com, a rising  Amazon.com ( AMZN ) rival, as a client because of its security features, pricing and service, a Jet.com executive said. Katie Finnegan, head of corporate development, told IBD that payments firm Braintree is “very startup friendly” and that the PayPal company has a “clear development roadmap.” “These were all purely commercial impulses,” Finnegan said, who added that Braintree was willing to implement security features that Jet.com was interested in. “ I think they’ve  been a good partner that has supported us as we’ve grown pretty exponentially since launch,” she said. Privately held Jet.com had a number of payments services options besides Braintree, including developing its own payments technology, which is the route Amazon.com has taken. Square ( SQ ), a digital cash register and payments processor, recently announced that it was adding functionality that would allow nearly any website to use it to process payments. Square’s clients are mostly small and midsize companies. New Jersey-based Jet.com raised $350 million in a Series B funding round that closed in November. The company has more than 3.5 million registered users as of January. The company declined to disclose sales figures. PayPal stock is down more than 2.5%, near 38, in afternoon trading on the stock market today . Shares are below a 40.03 entry and an earlier entry at 38.62.