Facebook Stock Prediction: Facebook Intensifies Its Attack Against Snapchat

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First.


FB Stock Prediction


  • Not content in copying features of Snapchat, Facebook is reportedly creating a dedicated teen-centric messaging app. Snapchat, now listed at NYSE, has a market cap of $25 billion. Snapchat rejected Facebook’s takeover offer of $3 billion cash in 2013.
  • Snapchat touts 166 million active daily users, most of them teen-agers.
  • Kids and teen-agers are coveted demographics for advertisers. Facebook will therefore continue assaulting Snapchat’s user base.
  • I Know First have positive algorithmic forecasts for Facebook.

Facebook (FB) tried and failed to buy Snapchat for $3 billion in 2013. Snap, owner of Snapchat, had its IPO last March 2 Snap is now valued at $25 billion. Snap’s rejection of Facebook is likely why Zuckerberg overpaid and bought WhatsApp for $19 billion in 2014. Facebook also created its own Messenger app to further compete with Snapchat. WhatsApp, Messenger, and Instagram copied features of Snapchat for years. Facebook clearly has an obsession to undermine Snapchat’s rapid growth. Snap’s stock price has dropped notably from its high of $29.44. However, it cannot be denied that Snapchat still remains highly-valued by investors. Investors and industry observers think Snap is the next Facebook-growth-story. This is an intolerable situation. Facebook wants to be king of advertising on everything social.


(Source: Google Finance)
Snapchat had 58 million users in 2016. Snap Ads-Discover and Snap Ads-Live advertisements contributed most of Snapchat’s U.S. revenue of $384.4 million in 2016. Ad research firm eMarketer expects Snapchat to earb $1.32 billion in ad revenue from the United States in 2018. Snap Ads compete with Facebook’s Display Ads business. Snapchat is a growing threat that Facebook is taking seriously.

Facebook dominates the U.S. display ads advertising industry. Facebook’s U.S. digital display ads revenue will reportedly jump 32.1% to $16.33 billion this year. But a billion dollars is still a billion dollars that Facebook would lose to Snap Ads. Facebook’s momentum-driven growth story is endangered when rivals like Snapchat is taking away advertising customers.
Facebook Intensifies Its Campaign Against Snapchat
Facebook is allegedly creating a new teen-focused messaging app called “Talk”. Instagram is already popular with teens but Facebook apparently is still not satisfied. It wants another teen-centric social messaging app to further erode Snapchat’s appeal. The key feature of Talk that Snapchat, Messenger, and Instagram don’t have yet is parental controls. This is a clever way of Facebook asking the support of parents to choose what messaging apps their children should use.
Parents control the purchasing power of their children. Facebook felt parents also deserve the right to influence the app choices of their kids. Talk is Facebook’s answer to the parental worries over Snapchat’s popular, but dangerous, disappearing messaging system.
In spite of Facebook Messenger, Instagram, and WhatsApp’s popularity, Snapchat still grew and now touts 166 million active daily users. Teen-agers and school children are a most-coveted audience for advertisers. More often than not, parents will always pay for what their beloved children wants.

(Source: Statista)
Snapchat’s popularity with teens is helping it to eventually earn $1 billion in advertising sales by end of 2017. This estimate is even more annoying because Facebook’s $19 billion subsidiary WhatsApp is making zero money. I believe Talk will look like Snapchat and will feature targeted advertising. The only difference will be is that Talk will have parental controls, which will allow mom and dad to review the chat/sharing history of their children.
Facebook has financial interests in its continued assault against Snapchat. Billions of dollars in advertising money is at stake. Copying features or making copycat versions of Snapchat is necessary to attract the capricious attention of children and teen-agers.
The parental controls being implemented in Facebook Talk app is an advantage that Snapchat will likely imitate eventually. Predators also stalk the social messaging ecosystem. It is the responsibility of messaging apps owners to safeguard kids from adult predators grooming future victims using Snapchat or Instagram.
Facebook Talk therefore is a safer tool for children to keep in touch with their friends.
I still rate FB as a Buy. The Artificial Intelligence-powered algorithmic forecasts of I Know First are also in favor of going long on Facebook.

The positive confidence of hedge fund managers for Facebook also backs up the bullish FB algorithmic forecasts of I Know First.


(Source: TipRanks)

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Past I Know First Success With FB

I Know First has been maintaining its bullish forecast of FB, such as its bullish article published on December 15, 2015. Facebook is harshly competing against Snapchat regarding messaging apps. It already launched Messenger in order to attract a large portion of the teens. Facebook continues its expansion with its last app called “Talk” which enable parental control. Since the forecast’s release on December 15, 2015, Facebook’s stock has increased by 50.44%.


This bullish forecast for FB was sent to I Know First subscribers on December 15, 2015. To subscribe today click here.