Reportedly, Facebook Inc. (FB) is in the process of developing a standalone app that will allow users to interact and communicate under the garb of a pseudonym. However, the company has not yet confirmed anything in this regard.
The company believes that the usage of pseudonyms will make Facebook users feel more comfortable while discussing a range of topics with other users. Also, with the new app in place, the users will be able to create multiple user names to discuss different topics.
Per speculations, the development of the app has been underway over the past one year. However, the name of the rumored app is not yet known. Also, no details have been revealed whether photo sharing will be possible alongside interactions through the app.
We believe that launching another standalone app will be a highly risky proposition for Facebook, especially considering the fact that the company has seen little success with such apps in the past with the sole exception being that of Messenger.
Some of the other standalone apps of the company include Home and Slingshot, both of which failed to gain popularity with the masses.
Currently, Facebook is the world’s largest social media platform with over 1 billion monthly visitors. It aims to take this number to 7 billion in the near future. However, to do so it will have to attract users from all age groups. We believe that the use of pseudonym in this new app improves privacy of members. This will attract new users, particularly teenagers.
However, with the new app, Facebook will now enter into direct competition with other anonymous-based apps like Secret and Whisper.
Stiff competition from Yahoo (YHOO), Twitter (TWTR), LinkedIn (LNKD) and Google (GOOGL) remains a major headwind going forward.
Nevertheless, we believe that Facebook’s growing mobile user base, Instagram’s increasing popularity, frequent launch of new products and international expansions will boost the company’s top line and profitability going forward.
Currently, Facebook has a Zacks Rank #2 (Buy).
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