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Facebook (FB) Launches Video Service Watch Across the Globe

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Facebook (FB - Free Report) recently rolled out its video streaming service, Watch, globally, a year after launching the same in the United States.

Facebook Watch is a special section on the social media giant’s platform that focuses on video content like entertainment, news and sports among others. Notably, it offers a range of shows that users can choose from.

Additionally, Watch creates a personalized feed for each user and offers a watch list of a collection of videos from Facebook pages, which a user follows. Moreover, the feature also allows users to save videos and watch later.

The new feature launched by Facebook is definitely a move to tap the fast growing streaming market, which is currently dominated by the likes of Netflix (NFLX - Free Report) , Alphabet’s (GOOGL - Free Report) YouTube and Amazon Prime.

Moreover, the company, which has a huge user base of 2.2 billion, is also trying to monetize group viewing activity, which is expected to drive engagement levels and attract ad dollars.

Facebook, Inc. Revenue (TTM)

Facebook, Inc. Revenue (TTM) | Facebook, Inc. Quote

Can Facebook Enhance the Social Connect?

Facebook is focused on bringing more people together to watch its content, eventually allowing users’ to engage more deeply as opposed to binge watching. Notably, the company has plans to spend up to $2 billion to create and produce content on Facebook Watch.

The company has introduced features like “Watch Party” that enables group members to watch videos together and interact among themselves.

Additionally, the social media giant is also allowing users to interact with their favorite video creators to further strengthen the social connect, which will eventually drive viewership.

Moreover, Facebook has been successful in bringing in content that will keep users glued to the platform. Notably, the company struck deals with the likes of Major League Baseball (MLB), to stream 25 games on Watch this season and Fox News (FOXA - Free Report) and CNN to introduce news shows.

Despite all the concerns, Facebook still is a dominant player in social media and its huge user base can definitely help the company explore the streaming space.

We believe that by bringing more video content, Facebook is trying to bring in more ad dollars, which remain the mainstay of the company’s revenues with over 98% contribution in the last reported quarter.

Slowing User Base Growth Rate

However, Facebook’s slowing user base growth rate primarily due to increased concerns over data privacy is a concern.

Moreover, aggressive investments related to improving ad transparency, removal of fake accounts and curbing fake news is likely to hurt near-term profits.

Facebook projects revenue growth rates to decline in the second half of 2018 and the company now expects expenses to increase at a faster rate compared to revenues in 2019.

Facebook currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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