Wall Street analysts are eagerly anticipating Facebook's possible unveil of its long-awaited cryptocurrency payments plan on Tuesday. According to various reports the company is preparing to finally reveal what it calls Project Libra with partners including Visa and Mastercard.
Facebook is the best performing of the so-called FAANG stocks this year and is up over 40% year to date. FAANG refers to a group of tech and internet stocks that includes Facebook, Amazon, Apple, Netflix and Google.
The social media giant has also been under tremendous pressure from government regulators due to various privacy issues, and most analysts think the crypto project may gave the company a big lift in more ways than one.
"We believe this may prove to be one of the most important initiatives in the history of the company to unlock new engagement and revenue streams," RBC analyst Mark Mahaney said.
Other analysts agreed.
"We believe this is a major initiative for Facebook, and one that has the potential of putting the company front and center in areas beyond advertising, including commerce and financial services, materially expanding its total addressable market and growth prospects," analysts at SunTrust said. "It reduces the potential for regulatory scrutiny and opposition on anti-trust grounds (especially in the current environment), given Facebook's consortium approach and the varied nature of the partners."
Facebook is not just looking at the social media space, according to analysts at MoffettNathanson.
"Facebook has its eyes set on becoming the world's leading ecommerce platform as well," they said.
Here's what else the analysts are saying about Facebook's crypto launch:
"We believe this is a major initiative for Facebook, and one that has the potential of putting the company front and center in areas beyond advertising, including commerce and financial services, materially expanding its TAM and growth prospects. ... It positions the company as one of the key actors at the center of the crypto currency development, and a main architect of the future of this emerging and important trend. While crypto currencies have existed for several years now, no other company could bring the combination of user scale, brand support and balance sheet, which Facebook can in our opinion. ... It reduces the potential for regulatory scrutiny and opposition on anti-trust grounds (especially in the current environment), given Facebook's consortium approach and the varied nature of the partners."
"We believe a Facebook cryptocurrency-based payments system could be especially useful in countries with high inflation/unstable banking systems and for cross-country remittances. So, Facebook's commerce ambitions do not appear to be limited to developed markets. Rather, Facebook has its eyes set on becoming the world's leading ecommerce platform as well."
"We believe this may prove to be one of the most important initiatives in the history of the company to unlock new engagement and revenue streams, and we plan to provide an analysis of the White Paper to help investors analyze the underlying cryptoeconomics of the token. We believe Facebook will use crypto to facilitate a platform for: 1) Payments; 2) Commerce; and 3) Applications & Gaming. And we believe this strategy is a multi-step process, starting with a focus on user engagement through messaging and leading to further monetization with each subsequent, deeper step – a similar strategy that has worked well for Facebook's Core Advertising business."
"With more than 2.5 billion users, Facebook and its partners could be a significant endorsement of cryptocurrency and a notable addition to the Facebook app ecosystem. Although many questions remain on ease of use and potential adoption as there are very viable online payment alternatives in place, the consortium will likely get significant press/visibility and could be a medium-term catalyst for eCommerce activity on Facebook. We see the launch as an important initiative for the company as it builds out a more private messaging ecosystem with eCommerce capabilities."
"Multiple reports suggest that Facebook will unveil details of its cryptocurrency effort (dubbed Libra) tomorrow morning via the publication of a whitepaper. The reports suggest that Facebook's Libra initiative could be one of the most well organized efforts by a global consumer tech company yet. The currency could have a variety of applications, from P2P money transfer to merchant shopping (including on Instagram Shopping and Facebook Marketplace). As Zuckerberg said at this year's F8, "sending money should be as easy as sending someone a photo." Libra could introduce a meaningful new product and profit stream for FB over the coming years. That said, the regulatory framework for cryptocurrencies remains uncertain, and Libra will also be an important test for how well Facebook has been able to (or will be able to) overcome the recent questions about its trustworthiness."