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Facebook's (FB - Get Report)  "Explore" tab on Instagram has rapid monetization potential and could add $1 billion in revenue by 2021, analysts at Morgan Stanley wrote in a note. 

Facebook shares ticked 0.94% higher to $189.42 a share Thursday, though the broader market was higher on several positive macro developments. 

"Ads are coming to Instagram Explore as FB follows its core playbook of monetizing already-existing engagement," Morgan Stanley analyst Brian Nowak wrote. "We see a $1bn+ Explore revenue opportunity by '21 given Explore's strong users/engagement/intent." The word intent refers to shopping intent, which can often be a tailwind for ad pricing.

Analysts currently expect Facebook revenue in 2021 be $101.4 billion, according to FactSet. Nowak says the new ads on Explore could add roughly 2% to current 2021 earnings per share estimates, which are an adjusted $12.30. 

More than half of all Instagram users use the Explore tab every month, but it hasn't yet been monetized. The ads will appear within the next few months, but the main grid won't have any ads, Nowak outlined. When a user scrolls down for more content, the ads will populate. 

Nowak believes Facebook is well on its way to successfully monetizing Explore. "The keys to Explore monetization will come down to users, engagement (time spent per user), intent and ad innovation. Explore already checks 3 of these 4 boxes."

Explore already has a large number of users, and Facebook said on its third quarter 2018 conference call that about 20% of time spent on Instagram is spent on Explore, fulfilling the engagement check box. As for shopping intent, "our industry conversations indicate that Instagram and Explore have high degrees of 'aspirational' browsing, which resonates well with branded advertisers and commercial intent," Nowak said. Innovation is the last element Facebook needs to fulfill, according to Nowak. 

The Explore ads are part of Facebook's push to make its ad products akin to an e-commerce experience, and those efforts could add $4 billion in additional 2020 revenue, Nowak said. 

Facebook has been monetizing its Stories product on Instagram, as well as other products on both the Instagram and Facebook platforms. "This announcement speaks to how FB continues to find ways to extend its earnings runway by monetizing under-monetized engagement," Nowak said. "FB's strong engagement enables it to continue to layer on revenue drivers even as the business approaches ~$100bn of revenue (by 2021)."

Facebook shares have gained 40% year-to-date. 

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