Facebook, Inc. (NASDAQ: FB) is showing signs of success in creating new use cases and sources of engagement with its user base, according to Morgan Stanley.
Facebook's new features across its different platforms like Reels, Marketplace and Shops could contribute an extra $3 billion in revenue in the U.S. alone, analyst Brian Nowak wrote in a note. This would put the company's prior 23% 2021 revenue growth estimate to be conservative.
Reels: Morgan Stanley's proprietary AlphaWise survey suggests 12% of Americans use Instagram Reels on a daily basis and 34% use the new video feature on a monthly basis. This is particularly encouraging as it was launched around 40 days ago and is showing metrics similar to TikTok's usage at 17% daily and 36% monthly.
If Instagram sustains its growth, the company could generate $600 million in revenue from Reels next year.
Instagram Shopping: The research firm's survey also found 8% of participants use Instagram Shopping on a daily basis and 28% use it on a monthly basis. The adoption rate should rise ahead of the Holiday season as consumers are likely to avoid physical malls.
Instagram Shops represents a $1.9 billion revenue opportunity in the U.S. next year, even if the company wins a 2% e-commerce market share.
Facebook Marketplace: Facebook's Marketplace adoption has grown 1,200 basis points from the first quarter of 2018, based on the latest AlphaWise survey. Specifically, 15% of participants use Facebook Marketplace daily and 56% use it monthly.
The service faces a notable catalyst ahead as many consumers look to sell some of their shelter-in-place purchases that were made in recent months.
Facebook Marketplace faces a $400 million revenue opportunity in the U.S. alone next year.
Nowak maintains an Overweight rating on Facebook's stock with a price target lifted from $285 to $295.
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