David Goggins
Former Navy Seal
Career Development
Bryan Cranston
Critical Thinking
Liv Boeree
International Poker Champion
Emotional Intelligence
Amaryllis Fox
Former CIA Clandestine Operative
Chris Hadfield
Retired Canadian Astronaut & Author
from the world's big
Start Learning

Why Facebook Stock is Undervalued: Facebook Credits

First of all, I am not an analyst nor do I own any stock in any public company. The last time I did invest in a promising Internet company ended in a disaster, thanks to Deutsche Telekom. 

Nonetheless, I believe the Facebook stock is undervalued. Everyone who believes in the company will tell you that there is huge potential in its 900 million users, but most of them will talk about new forms of advertising or tailored experiences through the social graph. I think that’s all small change and not the true money maker. Advertising revenue is far too unstable to build a lasting company, even Google has been spreading out into other verticals for a while now which I believe is pretty telling. No, the true value of Facebook lies in its own currency: Facebook Credits. 

No one is talking about it as at the moment Facebook Credits are just a convenient way to get access to games on the social network, but I don’t believe that this is the real plan behind having your own currency. As I had a pretty successful online teaching career, I noticed early on how difficult it still is to send and receive online payments in the global market today. There are huge parts of the world’s population who have access to the Internet but cannot pay for goods and services, even if they want to. One could say, there is a large group of Internet window shoppers out there. 

I have been actively teaching between late 2008 and early 2010 but astonishingly not much seems to have changed in the meanwhile when I checked the different options lately. Some startups in the education space put in some really heavy work to offer as many payment methods as possible, for example italki was famous for adding one more payment provider every couple of months. Yet, it did not help them to reach a really big market.

The reason for this is probably convenience and a lack choice. Most of these payment methods involve several steps, it’s not comparable with simply recharging your PayPal account. If you take cashU as an example, a quite popular payment method in the Middle East and North Africa,  you need to find a shop that sells the cashU cards which can be a first hurdle to clear. And the percentage the provider takes for the amount you charge on the card is also pretty hefty. Last but not least, you have to calculate what amount you charge to use the card efficiently as you don’t want to have money left on the card that you cannot use. All in all, many steps to take that are contrary to the usual impulsive behavior of buying on the Internet. 

I also don’t think that people will go through all this in order to get access to one particular service. You would really, really want to learn something with a particular provider in order to invest all that time and hustle. If you don’t have at least ten different options to spend your money on you might as well do just fine without even this one option. 

Facebook Credits on the other hand are the perfect solution to all of this. Firstly, most of these potential clients are on Facebook and very familiar (probably more than I am) with the different games and services the social network is offering. If (as soon as) Facebook offered its prepaid cards in shops in the Middle East, India, China, Africa, South America etc advertising revenue would look like peanuts. 

Sure, there have been many storefronts closed on Facebook lately but then Facebook did not really push for its currency yet. Most payments were done by other providers what added an extra and unnecessary layer to the process. Facebook payments need to work like Amazon, e.g. one-click-payment and that would be the case with Credits. 

Facebook already did tests with those cards in the US and the results seemed to be promising. And as soon as you add Facebook’s mobile strategy to the picture, you’ll get another potential revenue stream: mobile banking & p2p payments. Facebook Credits on mobile phones could become a huge competitor for M-PESA as Facebook would be able to offer far more additional services like online shopping for instance. As recent as February, Facebook made a partnership with Orange to bring the social network via Unstructured Supplementary Service Data (USSD) to Africa. 

Of course, Facebook Credits would also spread into the real world. There is no reason why you should not be able to pay for your espresso with Facebook Credits. And that ties in check-ins, reward programs, personalized coupons & ads - you name it. 

All in all, Facebook Credits have the potential to become a kind of unofficial world currency and Facebook would earn on each single transaction. That’s the true power of 900 million users, forget the ads.

Picture lev radin /

Live today! | Personal finance in the COVID-19 era

Sallie Krawcheck and Bob Kulhan will be talking money, jobs, and how the pandemic will disproportionally affect women's finances.

Hints of the 4th dimension have been detected by physicists

What would it be like to experience the 4th dimension?

Two different experiments show hints of a 4th spatial dimension. Credit: Zilberberg Group / ETH Zürich
Technology & Innovation

Physicists have understood at least theoretically, that there may be higher dimensions, besides our normal three. The first clue came in 1905 when Einstein developed his theory of special relativity. Of course, by dimensions we’re talking about length, width, and height. Generally speaking, when we talk about a fourth dimension, it’s considered space-time. But here, physicists mean a spatial dimension beyond the normal three, not a parallel universe, as such dimensions are mistaken for in popular sci-fi shows.

Keep reading Show less

How often do vaccine trials hit paydirt?

Vaccines find more success in development than any other kind of drug, but have been relatively neglected in recent decades.

Pedro Vilela/Getty Images
Surprising Science

Vaccines are more likely to get through clinical trials than any other type of drug — but have been given relatively little pharmaceutical industry support during the last two decades, according to a new study by MIT scholars.

Keep reading Show less

Consumer advocacy groups are mostly funded by Big Pharma, according to new research

An article in Journal of Bioethical Inquiry raises questions about the goal of these advocacy groups.

Image by Jukka Niittymaa / Pixabay
Politics & Current Affairs
  • Two-thirds of American consumer advocacy groups are funded by pharmaceutical companies.
  • The authors of an article in Journal of Bioethical Inquiry say this compromises their advocacy.
  • Groups like the National Alliance on Mental Illness act more like lobbyists than patient advocates.

Keep reading Show less
Scroll down to load more…