Facebook’s Cryptocurrency Could See as much as $19 Billion in Additional Revenue By 2021, Says Barclays Analyst
Facebook’s stablecoin which is still in development has been a source of many predictions in the past few weeks with one of the major Wall Street firm analyst predicting it to become a multibillion-dollar revenue opportunity.
Internet Analyst at Barclays, Ross Sandler, wrote to one of his clients that there would be additional revenue of $19 billion that could be generated from the “Facebook coin” by the year 2021.
Barclays has based its revenue estimates off of Google’s digital distribution service which is also called Google Play, the official app store for Android. Presently, Google Play generates $6 in “net” revenue per user. Facebook could see a “similar cadence,” across its nearly 3 billion users by 2021. Sandler predicts that virtual currency by Facebook would allow for more premium content to be presented on the social media platform. The usage of cryptocurrency could transform their revenue model and is something that is “sorely needed at this stage of the company’s narrative” explains Sandler.
“Merely establishing this revenue stream starts to change the story for Facebook shares in our view,” Sandler said. “Any attempt to build out revenue streams outside of advertising, especially those that don’t abuse user privacy are likely to be well-received by Facebook’s shareholders.”
Facebook’s digital currency is a “stable coin,” which has its price fixed and would be attractive to investors and customers alike. The stable coin is comparatively less volatile as they are tied to a currency like the U.S. dollar and hence could be better suited for mass adoption.
In 2010, Facebook had tried to create a virtual currency called “Facebook Credits” which were used to make in-app purchases. The users would first have to trade their money to get “Facebook credits.” The idea was soon scrapped because the company had to bear the interchange costs and it ended up negatively impacting the profitability of the business.
The Social Media giant and the cryptocurrency sector have come a long way since then. According to Sandler, “The Company’s new cryptocurrency plan could potentially re-invigorate that business strategy.”
Sandler said that under David Marcus, former president of PayPal, who is currently heading the Facebook’s blockchain and cryptocurrency team, Facebook has been making huge strides. He claims that this venture by Facebook will see a better future compared to their previous experiments. And if this endeavor is successful, Sandler predicts that the company would “eventually” branch into the realm of consumer lending, remittance, and physical payments.