[ad_1]
Meta Platforms Inc.’s new user-subscription and verification service could nudge profit higher and generate more revenue for creators than rival social-media outlets, but its audience size “could be limited,” BofA analysts say.
In a note dated Monday, the two analysts — Justin Post and Nitin Bansal — estimated the service, Meta Verified, could bring in around 12 million subscribers by the end of this year or early next year, assuming a bigger rollout in the months ahead. That figure would be higher than those at Twitter and Snap Inc., given Meta’s
META,
larger size and reach, the analysts said.
Meta Chief Executive Mark Zuckerberg on Sunday said the social-media platform would begin launching Meta Verified, a subscription service that would allow users to verify their accounts with a government ID. The service will also offer additional protections against impersonation, as well as “direct access” to customer support.
The service, available on Facebook and Instagram, is rolling out in Australia and New Zealand this week, with more countries to follow, Zuckerberg said. The price of the service starts at $11.99 a month on the web, or $14.99 a month on iOS, Zuckerberg said.
Meta Verified’s debut follows the launch last year of Twitter’s paid-subscription service, Twitter Blue, as well as layoffs at both companies and a broader slowdown in the digital-ad market that has fueled their revenue. Tesla Inc.
TSLA,
Chief Executive Elon Musk, who bought Twitter last year and has aggressively slashed costs and staff, called Zuckerberg’s move “Inevitable.”
The BofA analysts, citing reporting from The Information, said that Twitter had around 300,000 subscribers to Twitter Blue as of mid-January, or 0.2% of monthly active users. Snap
SNAP,
they said, had 2.5 million subscribers, or 0.3% of 750 million monthly active users.
Assuming Meta expanded its own subscription option globally over the next two to three months — and attracted 0.4% of monthly active users in the process — Meta Verified could land around 12 million subscribers by the end of 2023 or early 2024, the analysts said.
“Assuming a globally consistent subscription cost at $11.99/month could yield ~$1.7bn in high-margin revenue in 2024,” they said. “Applying a relatively high 60% margin and 20% tax rate could yield up to an incremental $0.32 (3%) bump in EPS.”
The analysts said that Meta’s verification service was one of several opportunities to diversify the company’s sales channels. And they said “further cost cutting news” could be an additional driver for the stock. But they noted possible constraints to Meta Verified’s audience size.
“However, audience size could be limited by the number of creators and influencers on Meta’s platforms (Linktree estimates that there are over 45mn Global content creators with over 10k+ followers), and Meta’s release suggests that those already verified can keep their status,” the analysts said.
Shares of Meta were up 0.2% on Tuesday. The company’s stock is down 14.2% over the past 12 months; by comparison, the S&P 500 Index
SPX,
has fallen 6.7% over that period.
[ad_2]
Source link
