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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.

Facebook CEO Zuckerberg On Bots, Live Video And Global Access

CEO Mark Zuckerberg set a 10-year strategy for Facebook ( FB ) on Tuesday that emphasized pushing its Messenger chat platform deeper into the business world with chatbots, enhancing Live video with virtual reality and expanding the social network to remote regions of the world using aircraft and satellites for beaming Internet services. Zuckerberg presented his vision in a keynote speech at the start of Facebook’s two-day F8 Developer Conference on Tuesday morning in San Francisco, before some 2,600 attendees. 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. Consumers already use Messenger to communicate with businesses. More than 1 billion messages are sent between businesses and users via the app, Facebook says. Messenger is already used to request a lift from Uber or Lyft, purchase tickets for concerts and other events, make a payment and more. The addition of chatbots will make those connections deeper, with better services. The addition of chatbots also moves Facebook a step closer to making Messenger a revenue generator that will reach into the billions, through ad placements and fees for other services. Facebook has not commented on reports that ads are coming to Messenger. The company always has been cautious about monetizing products, as it did with its photo-sharing site Instagram, starting out slow before ramping things up. Bots Will Help You Pick Flowers For Delivery Chatbots are digital characters infused with artificial intelligence that can mimic human conversation. The idea is that businesses on Messenger could use chatbots to interact with customers via automated response systems, aiming to help boost sales. Chatbots can help businesses eliminate the human effort required for communicating with users. An example that Zuckerberg used was with 1-800-Flowers ( FLWS ), where a chatbot will help users on the selection and delivery of flowers, without the need for a phone call. Another was with CNN, which would send users a daily digest of stories, with story selection getting more personalized as time goes on. The bots can provide anything from automated subscription content, like weather and traffic updates, to customized communications, like receipts and shipping notifications, Facebook said. “Messenger will be the next big platform for connecting services,” Zuckerberg said. Messenger is one of Facebook’s fastest-growing products, with more than 900 million users, up from 800 million in December. Zuckerberg also laid out a vision for Facebook’s live video streaming service call Live. He envisioned a time when users will view Live video through a virtual reality platform, such as its Oculus Rift headset that began shipping last month. “We are at the golden age of video,” Zuckerberg said. VR Goggles To Become Eyeglass Size He also sees a time when VR goggles, which currently protrude across the upper face of a user and are held in place with headbands, will someday shrink to the size of eyeglasses. 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. Zuckerberg also revealed that Facebook is developing a solar-powered aircraft with a wingspan wider than a Boeing 737’s, able to fly at 60,000 feet, for delivering Internet service. Facebook is also planning to provide Internet service via satellites and said the first launch will take place next year. “Aircraft like these will help connect the whole world because they can affordably serve the 10% of the world’s population that live in remote communities without existing Internet infrastructure,” Zuckerberg said. Zuckerberg Presents A Political Message As he has at other events and presentations, Zuckerberg expressed a deep passion for connecting the world to the Internet — through Facebook. He even used the event to lash out at politicians who talk of building walls and slowing immigration. “Fearful voices are calling for building a wall, slowing immigration and even cutting access to the Internet,” he said. “Instead of building walls, we can help people build bridges, one connection at a time, one innovation at time. It takes courage to choose hope over fear,” he said. More than half the world’s population of 7 billion are not connected to the Internet. Before the conference started, news came that Messenger users can now import files from Dropbox, an online storage company that competes with Box ( BOX ). It’s the first time that Messenger has partnered with a cloud-based file-sharing service. The feature allows users to upload a file, including pictures and video that can be attached to the conversation. Facebook stock closed at 110.61, up 1.5%. 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.  

Facebook Stock Breaches 50-Day Support Amid Usage Fears, F8 Show

Loading the player… Facebook ( FB ) fell in quick turnover for a second session in a row amid concerns that users are not sharing as many personal posts. The Information reported last week that Facebook saw a 21% drop in original posts from mid-2014 to mid-2015, and that it is working to correct that decline. Meanwhile, privately held social media competitor Snapchat is all about personal shares. Facebook-owned Instagram is also a hub for personal posts. The social media giant has indicated that it’s just the type of sharing that has changed on its main platform, not the level of sharing. Facebook’s annual F8 developer conference begins tomorrow, where chatbots are expected to be a hot topic. That could open a new revenue stream for businesses looking to interact with their customers on a social platform. But tech giants still have a lot to learn when it comes to chatbots. Microsoft ’s ( MSFT ) experiment with teen chatbot Tay quickly went south. Facebook shares dropped 1.5%, breaching support at the 50-day line. A drop below the 50-day moving average in heavy volume is an especially bearish sign, but this move was in slightly above average trade. Shares are trading 7% below a cup-with-handle base buy point of 117.09. Microsoft is trading 4% below its late-December high and a consolidation buy point at 56.95, which is 10 cents above the high. The stock fell 0.2% Monday. Facebook last week rolled out its Live platform globally, with expanded features — edging into Twitter ’s ( TWTR ) realm, which includes its Periscope live streaming platform. Twitter is still searching for positive catalysts to revive its shares. Last week, it signed a pact with the NFL to live stream 10 Thursday Night Football games. Twitter is in an extended downtrend, trading 68% below its 52-week high. The stock dipped 0.8% Monday. Among other widely held tech stocks, Google owner Alphabet ( GOOGL ) is working on a cup-with-handle base with a 777.41 buy point. It’s trading 3% below that level, falling 0.3% Monday. And Apple ( AAPL ) tried to retake the 110 price level, but pared its gains to close up 0.3%. Apple is nearing its downward sloping 200-day line, but its recent attempts to retake that level have failed. Apple stock is 18% below its late-April peak. Image provided by Shutterstock .