Facebook Trading Rapidly Gains Ground

The following is a sponsored blog post:

 

The strategic shift in Facebook’s operations is now apparent. The social media giant has facilitated ease of trading among its 1.49 billion users to make it much simpler to trade everything from high-end items like vehicles to toasters, stationery and beyond. Buying and selling of items is available with a Facebook feature known as Groups, where users can congregate to discuss all manner of topics ranging from sports, trending topics, political debates, economics and beyond. Already 57% of Facebook users use the Group feature every month, and the goal is to increase trading activity in Groups.

 

Towards the end of 2014, Facebook officially launched its boldest endeavour yet: For Sale Groups. Just recently, Facebook made it that much easier for groups to start functioning, since there is no longer a requirement for Facebook to approve each of the groups that goes live. Facebook has been adding all sorts of technological applications and features to make sales on its social media site a reality. During August 2015, the company announced that it was conducting ways and means for businesses to trade through their Facebook profiles. The Facebook messenger app also allows the tracking of online orders, and this was made possible in March 2015.

 

In 2013, several engineers from Facebook conducted a research-intensive trip through Indonesia. What they were looking for was an effective marketing idea to promote For Sale Groups in the social media network. The introduction of a SELL function has made it so much easier for all approved Facebook groups to allow their members to sell items. And since mobile is the new go-to solution for social media networks and trading applications, Facebook’s messenger service allows precisely that. Buying and selling is easily done on mobile, PC or desktop with Facebook now. Binary options traders see this new functionality as having tremendous upside potential for the stock. For example when you trade binary options with call options on Facebook, chances are that strategic restructuring efforts like this one will yield high profits.

 

What is Facebook hoping to achieve with Group Trading Facilities?

Facebook is hoping to generate increasing revenues by providing users with the option to trade on site. Instead of clicking out of Facebook to make purchases at third-party websites, Facebook wants to make it possible for users to use the social media giant to conduct all of their trades in groups. Almost 50% of Internet users across the United States regularly check their Facebook pages on a daily basis. However the difficulty comes from the fact that only 5% of Facebook users perceive it to be the right place to make purchases. From Facebook’s perspective, the goal is to keep people on site for as long as possible. That way, users won’t have to navigate away from Facebook to make purchases or sell items.

 

But there is plenty of competition facing Facebook. This comes in the form of eBay and Craigslist. Presently, eBay is approaching 1 billion items for sale around the world. Facebook has not provided any substantive data regarding how many items it currently has, suffice it to say the range of items spans everything from household products to vehicles. In terms of sheer numbers, it’s a no-brainer for Facebook. Facebook has 1.49 billion users and eBay recently announced that it has 157 million users. At a ratio of almost 10 to 1, Facebook is seriously looking to tap into the retail side of its social media operation to drive up profits and to increase visitor retention rates.

 

Facebook has attempted to enter the second-hand marketplace in the past, but to no avail. Eight years ago, it launched a rather novel feature called Marketplace but various shortcomings prevented it from taking off. Now however the features available for trading in Groups are highly advanced. Facebook users can now gauge the reliability of fellow users in terms of recommendations, feedback and so forth. Once you have completed a transaction, you have the option to recommend that seller in the group. The more favourable recommendations a seller receives, the more likely that seller is to be considered a credible trader.

 

Facebook Financial Performance

Over the past three months, Facebook has endured a roller coaster ride in the $82.09 range all the way up to the $98.39 range. In fairness to the company, the August equities rout led by China was largely responsible for the steep sell-off from $95.31 on August 19 to $82.09 by August 24. Since then, the stock enjoyed a mini-rally and is now trading at $94.39 (September 18). Also during the last 3 months, Facebook stock has appreciated by 14.40%. The 52-week high is $99.24 and the 52-week low is $70.32. At current prices, the company has a market capitalisation of $266.46 billion with a 1-year target estimate price of $111.60. Facebook’s earning per share is 0.98 with a price/earnings ratio of 96.11.

 

In terms of overall analyst opinion, the mean recommendation for Facebook stock going into the third week of September is a rating of 1.8. A strong buy is characterised as 1.0 and a sell is denoted by 5.0. In terms of upgrades and downgrades, 2015 has seen research firms Brean Capital (17 March 2015), Mizuho (26 June 2015), and Susquehanna (11 August, 2015) all upgraded their recommendation for Facebook to a buy or a positive rating. The major direct shareholders in Facebook include Sheryl Sandberg, Jan Koum, Mark Zuckerberg, Marc L Andreessen and Peter Thiel. The top five institutional shareholders include: FMR, LLC 6.45%, Vanguard Group Inc 5.28%, State Street Corporation 3.56%, Price T. Rowe Associates Inc 2.67%, and BlackRock Institutional Trust Company at 2.40%.

 

How to sell in a Facebook Sale Group?

It’s relatively easy to sell on Facebook, and this can be done in 4 easy steps. The first step involves going directly to the Sell Group on Facebook of your choice. Next up, click the Sell Something button, complete all the necessary information about the product or item that you are selling and then click the Post the sale. Users can easily toggle the on/off functionality of the sale feature on Facebook. It is clear that Facebook is branching out into the retail market by offering services that will increase user retention, and dramatically reduce the bounce rate from Facebook.

2 thoughts on “Facebook Trading Rapidly Gains Ground

    • Hi EL,

      Part of the frugal/living with less mantra has always been to sell the “junk” you don’t need. Seems like a lot of competition from eBay, Craigslist and the like but FB does have a huge user base to tap into. I guess they have to start monetizing all those members more efficiently. Thank you for commenting.

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