Facebook (FB - Free Report) recently acquired GIF search engine GIPHY for a reported deal value of $400 million. GIPHY is now part of this social media giant’s Instagram team.
Notably, GIPHY’s GIF search engine is available to a number of other social media platforms like Twitter (TWTR - Free Report) , Bumble, Snapchat (SNAP - Free Report) , Telegram and Bytedance’s TikTok.
However, GIPHY generates 50% of its traffic from the Facebook family of apps, which had almost 3 billion monthly users at the end of first-quarter 2020.
Per Facebook blog, the company plans for a deeper integration of GIPHY’s GIF library with Instagram and its other apps in the near future.
Moreover, Facebook doesn’t have any plans to cut access and GIPHY will continue to operate its library (including its global content collection). In fact, the company intends to invest further in its technology and relationships with content and API partners.
It is likely that GIPHY’s integration with competing apps is expected to provide Facebook with an insight into the activities of its competitors. However, the company needs to be careful in this respect as it may attract more scrutiny from regulators.
Notably, Facebook is facing antitrust investigation by the Federal Trade Commission (FTC), the U.S. Department of Justice and 47 state attorney generals.
User Base Expansion to Boost Growth
Facebook’s growing user base is a major driver. In the first quarter, while Monthly active users (MAUs) increased 9.6% year over year to 2.603 billion, Daily Active Users (DAUs) grew 11% to 1.734 billion.
Facebook’s user base expanded primarily owing to the coronavirus outbreak as more and more people were compelled to stay at home. Although the spike in usage is not expected to continue in the long run, Facebook’s initiatives to make its apps more engaging are likely to help sustaining its user base.
GIPHY acquisition is a noteworthy step in this regard as its exciting library of GIFs makes conversation lively and engaging for users.
Additionally, Messenger Rooms for video call, which supports up to 50 people with no time limits on call lengths, is a timely offering from Facebook. Notably, this Zacks Rank #3 (Hold) company saw a 1000% surge in the time spent on group video calling in March 2020. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Facebook is expected to benefit from the massive spike in video chat app usage. Moreover, the company’s broad user base makes it a notable challenger in the video conferencing app space, currently dominated by the likes of Zoom Video (ZM - Free Report) , Cisco’s Webex and Microsoft Teams, who benefited hugely from remote-working and online-learning wave.
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