Facebook shares recover on optimism its Messenger chat app can build closer banking relationships
Social media giant needs to make money from its properties beyond social network since saying last month that sales growth will slow and expenses will climb
Facebook Inc.’s shares rose on optimism that the company is forging deeper relationships with banks to offer customer-service products via its Messenger chat application, a business that could boost engagement as growth slows on its main social network.
Facebook has for years worked to make Messenger a natural place for consumers to communicate with businesses, aiming to replace email. Customers who opt in can already receive some airline boarding passes and receipts from PayPal transactions on Messenger. To do the same with major banks, Facebook has been trying to convince them that the conversations will be secure and customers’ personal data won’t be used in advertising.
“Account linking enables people to receive real-time updates in Facebook Messenger where people can keep track of their transaction data like account balances, receipts, and shipping updates,” Facebook said Monday in a statement. “We’re not using this information beyond enabling these types of experiences – not for advertising or anything else.”
A Wall Street Journal report earlier Monday said the talks with banks are ongoing, sending shares up as much as 4 per cent. The company has started to feel more urgency to make money from its properties beyond the Facebook social network since saying last month that sales growth will slow and expenses will climb in the next few years – a forecast that sent the stock tumbling 19 per cent in one day. The company has also faced questions about its ability to safeguard data following a series of scandals, including a third-party app that mishandled private user information. Some users may be wary of sharing especially sensitive financial details.
Still, Facebook has been building up user comfort with sharing financial information through its site for years. It already allows money transfer between friends and e-commerce transactions with businesses through Messenger. It also lets people buy and sell items through Marketplace, its version of Craigslist. And those on Facebook have become more comfortable using their credit cards in the news feed because of a product that enables people to ask their friends to donate to charitable causes.
Shares of Menlo Park, California-based Facebook ended the day up 4.5 per cent at $185.69. That’s down about 15 per cent from a record high reached in regular trading on the day it reported second-quarter earnings.
