Can Facebook Climb Back on Top?

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With shares of Facebook (NASDAQ:FB) trading around $64, is FB an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Facebook is engaged in building social products in order to create utility for users, developers, and advertisers. People use Facebook to stay connected with their friends and family, to discover what is going on in the world around them, and to share and express what matters to them with the people they care about. Developers can use the platform to build applications and websites that integrate with Facebook to reach its global network of users, building personalized and social products. Advertisers can engage with more than 900 million monthly active users — or subsets of users — on Facebook based on information they have chosen to share.

It’s not a leak this time: Facebook has officially launched Slingshot, a messaging app meant to compete with “disappearing message” app Snapchat. Facebook is after Snapchat’s audience because the social media giant has lost its popularity with the teen and young adult set, many of whom are spending more time on messaging apps like Snapchat or other social media platforms like Tumblr or Facebook-owned Instagram. So Facebook created an app meant to compete with Snapchat. The new app shares similarities to its competitor. It is a messaging app with messages that “disappear” after a user sends a reply to the message, making Slingshot messages potentially more fleeting than Snapchat ones, which last a predetermined amount of time, ranging from one to 10 seconds. Facebook’s new app has some other key differences, too. Slingshot requires that users reply to a message to be able to see what their friend sent them. Before that, it exists as a pixilated message that makes it tough to see what a friend sent.

Slingshot’s statement said this is to encourage usage: “With Slingshot, we wanted to build something where everybody is a creator and nobody is just a spectator. When everyone participates, there’s less pressure, more creativity and even the little things in life can turn into awesome shared experiences.” On Snapchat, hitting reply is not necessary to see the image. This has been one feature that has gotten some negative feedback already. Ellis Hamburger, a reporter at The Verge, wrote that the feature makes communication harder: “It’s frustrating, not exciting when a friend sends you a shot and you can’t immediately view it. Slingshot is a new and strange example of a messaging app that raises barriers instead of tearing them down, and increases the friction to viewing a friend’s photo instead of reducing it.” This barrier to communication may turn off regular Snapchat users, who can send messages without having to reply first. Used to being able to access the messages freely, a barrier to replying after loading an app may be annoying to users.

Another potential drawback may be that Slingshot does not notify users when the recipient has taken a screenshot of their image, a feature on Snapchat that that allows senders to know their content has been copied, reports The Huffington Post. Slingshot has a few potential advantages over Snapchat that may help it gain popularity. The ability to send images to multiple people is a feature that is unique to Slingshot right now. Plus, with the novelty of it being new, curious social media users will give it a try. It’s too early to say if Facebook succeeded in its mission to create a Snapchat competitor that will grow to be a rival of the messaging app, but it is certainly drawing attention. All that attention, plus the novelty of a new app, may draw a sizable crowd. The app is available for iOS and Android devices.

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