E-Commerce And Banking Move Doesn’t Do It For Facebook Stocks
Contrary to what it must have expected, Facebook, Inc's shares didn't do well as it closed Tuesday. Instead, CNBC reported that it reversed course and traded lower.
This after the tech giant revealed a new digital currency called Libra. Facebook plays the part of 'leader' of a group of companies and organizations that are invested in building the cryptocurrency.
Libra is expected to launch in the first half of next year. Already, the company's stock reacted by climbing 1% on Tuesday morning, only to flounder later in the day and end the trading day down 0.3% at $188.47 a share. Analysts on Wall Street have so far been bullish about the social media giant's announcement, seeing it as a fresh innovation more than anything else.
SunTrust's social media analyst, meanwhile, said that Libra could place Facebook "front and center" into areas beyond advertising and where the company had never been before.
RBC analysts, meanwhile, hailed the move and said that Facebook could be making one of the most important moves that it had done so for the past years of its existence.
Nobody knows how the cryptocurrency will work with FB so far. The details surrounding Libra has been pure speculation, and Wired reported that the company is currently looking for "dozens" of potential business partners.
This included online merchants and various financial firms, to extend the reach of what would become its potential blockchain-based marketplace.
Facebook is asking its future partners to pitch into an investment fund which would serve as the 'backing' for Facebook's coin and help shield against the inherent volatility and wild 'speculative swings' that cryptocurrency is known for.
In return, the pitch involves lower fees for merchants than most credit card companies offer.
There are speculations that this would defeat the purpose of creating profit from selling in an online marketplace. However, with the amount of time most people already spend on Facebook, it may be a moot point to forego making money early. Zuckerberg himself believes in Libra and simplified it as providing a way for people to send money in a "simple and secure" way.
Ultimately, it would be very difficult to buy into Facebook's 'Libra' plan this early. It's still very early and there would be kinks to iron out; regulations will have to be written into Facebook's marketplace, the stocks may have reflected the market's belief to adopt a 'wait-and-see' approach to 'Libra.'