Tuesday, March 28, 2017

Can Anyone Compete With Facebook?

The big news today is Facebook(FB) has released a "stories" feature similar to "camera company" Snap Inc(SNAP).  Facebook has stated the move has come from user requests. Sure I don't doubt that, but we aren't fools either.  The news has initially sent Snap shares reeling.  But this begs a bigger question.

Can Anyone Compete With Facebook?


Let's take a look at a few competitors that have stood up and lost their match with this social media heavyweight.

In what's arguably the most famous duel started a few years ago when Google(GOOGL) decided to take on the social media giant with it's own Google+ feature.  This was basically an extension of your original Gmail account where you could add photos, posts, and share any type of story you desired.

The main caveat was that it would sync easily within your Google framework including Android devices.  Plus Google would give it priority for their site index crawlers which is a plus for bloggers and marketers.  There was only one problem. No one really wanted to use it. After heavily touting the platform the company has let it go to the wayside. Although having used it myself for various things I can see where it's useful at times.

Do I dare say it? Myspace.  This company was around way before Facebook was even a twinkle in Zuckerberg's eye.  You can still use the website, and surprisingly many people still do.  Yet it's an afterthought except for those within the music community now. At one time Myspace was the go to platform when social media was still a fledgling sector.  Fox News(FOXA) even bought the company thinking it was an easy ticket to riches. Yeah about that.

Next up on the list is Vine. You remember them right? They were the 6 second video app that basically revolutionized video sharing. Anyone could film, edit, and share a 6 second clip with ease. Some people became overnight sensations on the app.  Twitter(TWTR) decided they wanted in on the action and acquired the company in 2012 for $30 million.  Then in October 2016 the company decided to shutdown the video service and the only bidder was Pornhub. Not exactly an ideal suitor.

But why would Twitter call it quits?

If you recall Facebook had purchased Instagram in 2012 for $1 billion. Then it turned the photo sharing app into the premier destination to create, edit, and distribute videos too. I'll never forget when Instagram started allowing users to create and share 15 second clips. I thought well there goes Vine.  At the time people thought Facebook made the wrong purchase. Instagram was after all an expensive purchase. Doesn't look like it anymore as the app now boasts over 600 million users, AND it has a stories feature just like Snapchat. Snap is receiving an all out assault from Facebook as the story feature is also available on it's Whatsapp and Messenger platforms which were added earlier. I'm not about to bet against the titan yet.

This is just a few examples of the titans that have tried standing up to Facebook. In these examples Facebook has clearly won. Add in the addition of anyone being able to share video live it's clear the company has put news, television, and YouTube in it's cross-hairs. It has even recently set it's sights on Ebay(EBAY), Craigslist, and Amazon(AMZN) as the company touts it's Marketplace feature.  I will add during my college years I had emailed Mark Zuckerberg about a platform to sell textbooks within your school. At that time Facebook was school based, and you could still send Mark direct messages.  I got no response, but a few months later the original Marketplace debuted. And my message disappeared.

Of course the company has failed at many projects. Their phone app that was supposed to wrap around existing Android and Iphone devices which flopped comes to mind.  There are plenty more endeavors that will fail in the future.

The company is by no means going at a bargain price, and after this multi-year rally the company is already worth over $400 billion, and in the top 5 globally by market cap. So adding shares here isn't as big of a no-brainer as it was before. That is of course unless you think the company has another $350 million worth of market cap left in it like Apple(AAPL). 

You can have plenty of good and bad ideas in business. The key is execute extremely well on the good ones.  It seems for now Facebook has figured that out.

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