Facebook Gets The Ball Rolling On WhatsApp’s Monetization In India
After appointing a COO for WhatsApp, Facebook (NASDAQ:FB) is now working rapidly towards monetization of the platform. Reports suggest that the company is working on “WhatsApp For Business,” a version of the app aimed at small enterprises to help them manage clients better. This version is currently in the design and testing phase and the company plans to launch it in India, where the platform has 200 million users (15% of Whatsapp’s total user base). Aimed at enterprises with 10 or fewer employees, WhatsApp is looking to provide an option for commercial messaging to help businesses to reach out to customers at scale. The company is also in the early stages of investigating WhatsApp as a channel for digital payments. After a pilot launch in India, the company might roll out WhatsApp for business to other regions which can set the ball rolling for monetization of the platform.
See our complete analysis for Facebook
- Rising 21% This Year, What Lies Ahead For Exxon Stock Following Q1 Earnings?
- Should You Pick General Electric Stock At $165?
- What’s Next For JetBlue Stock After A Sharp 19% Fall Post Q1 Results?
- Is Kimberly-Clark Stock Fairly Valued At $135 After A Solid Q1?
- How Will AMD’s AI Business Fare In Q1?
- Up 9% Year To Date, Will Chevron’s Gains Continue Following Q1 Results?
Communication and Payments Platform For Small Businesses
WhatsApp is looking to develop a version of its product whereby small businesses can communicate with a large pool of consumers without spamming them. This would allow businesses to send targeted messages and videos to consumers. The company could charge business customers a subscription fee, paving the way for monetization. If the company does enter the digital payments segment, it could generate significant revenues from the transactions carried out on its platform. Digital payments are being supported strongly by the Indian government, which is encouraging people to move away from cash transactions for better transparency and income tax collections. Several small businesses in the country use WhatsApp as the preferred method of communication with existing and prospective clients.
If Facebook is able to provide a version of the app that allows businesses to complete transactions on its platform, including payment, it could see significant traction in India. India has 35 million small and medium business enterprises, and provides a substantial opportunity for WhatsApp. Further, a successful pilot in the region could pave the way for launching “WhatsApp For Business” in similar economies such as Brazil and Indonesia.
According to our estimates, WhatsApp and Instagram account for around 25% of Facebook’s valuation, and we expect WhatsApp’s average revenue per user to increase rapidly and reach nearly $8 by the end of our forecast period.
This metric is a key driver for the company’s valuation, and if it increases at a more rapid pace, there can be an upside to our price estimate.
See More at Trefis | View Interactive Institutional Research (Powered by Trefis)