Facebook Stock Surges 12% to All-Time High After Introduction of 'Facebook Shops'

Siamak Masnavi
  • 20 May 2020

On Wednesday (May 20), Facebook stock (NASDAQ: FB) reached an all-time of high of $230.23 at 12:00 (Eastern Time), just one day after the social media giant unveiled "Facebook Shops", a new way for small businesses to sell online.

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According to a report by CNBC published earlier today, Morgan Stanley wrote in a note released today that "this could make Facebook a competitor to Amazon and Alphabet’s Google."  

The CNBC report also mentioned that Deutsche Bank's analysts were also impressed:

“We think Facebook Shop in a simplistic bull case could drive up to as much as a $30 [billion] revenue opportunity, across a combination of take-rate driven transactional and advertising revenue."

And finally, CNBC said that AB Bernstein, one of Wall Street's premier sell-side research and brokerage firms, had told its clients today:

“We have long viewed FB as the ‘rent’ to the digital economy and a core component of the online retail ecosystem.

Here is how Facebook's press release described Facebook Shops:

"Facebook Shops make it easy for businesses to set up a single online store for customers to access on both Facebook and Instagram. Creating a Facebook Shop is free and simple.

"Businesses can choose the products they want to feature from their catalog and then customize the look and feel of their shop with a cover image and accent colors that showcase their brand.

"This means any seller, no matter their size or budget, can bring their business online and connect with customers wherever and whenever it’s convenient for them. 

"People can find Facebook Shops on a business’ Facebook Page or Instagram profile, or discover them through stories or ads.

"From there, you can browse the full collection, save products you’re interested in and place an order — either on the business’ website or without leaving the app if the business has enabled checkout in the US."

One of the companies helping Facebook with Facebook Shops is Shopify (NYSE: SHOP), which said in its press release:

"Shopify has partnered with Facebook since 2015 to provide merchants the best multi-channel commerce solution, and is one of the first commerce partners supporting this new, mobile-first shopping experience.

"Merchants will get control over customization and merchandising for their storefronts inside Facebook and Instagram, while managing their products, inventory, orders, and fulfillment directly from within Shopify.

"Consumers will be able to easily find, browse, and buy products through a purpose-built, immersive experience in these apps they use every day.

"Checkout will be powered by Shopify for merchants, with Shopify also offering Instagram Checkout to select merchants testing the new feature."

Yesterday (May 19), in a Facebook live stream, Mark Zuckerberg, the CEO of Facebook, said:

“It’s one simple and consistent experience across this family of apps, which means it is easier for people. That of course means there’ll be higher conversions and more sales for small businesses.”

He went on to say:

"Our business model here is ads, so rather than charge businesses for Shops, we know that if Shops are valuable for businesses they’re going to in general want to bid more for ads. We’ll eventually make money that way."

The only thing that would make Facebook Shops is even more interesting is if it is integrated with Libra.

As you may remember, Facebook introduced this stablecoin project last summer and was hoping to launch it in 2020, but changes in its design, partly to address the concerns of governments around the world (starting with the U.S. government), has resulted in delays to the original roadmap, and now it is hard to see Facebook launching Libra earlier than sometime in 2021.