The mobile messaging platform, a service of Chinese internet giant Tencent (TCEHY) , consolidates features that users love from individual apps and services into one app. It makes it easy to order products and services, to communicate, and to store personal information. Such one-stop accessibility reflects a sea shift from the multiple apps models that now dominate the mobile world. Why use five different apps when someone can use one to meet wide-ranging needs.
Shares of Tencent closed at $19.61 in Thursday trading and have hovered around the $20 mark for the past year.
Most notably, Facebookwith its WhatsApp and Messenger system, is offering a similar all-in-one service, and seems to be developing features to keep pace with WeChat.
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WeChat's expansion from its mobile gaming roots has been impressive, and it is likely to boost its revenue. It reached 700 million monthly active users last month. WeChat has become the dominant messaging service in the world's second-largest economy. More than nine in 10 people living in China's largest cities are registered WeChat users. It is likely that WeChat will expand into other countries.
WeChat offers messaging features like text and voice messaging, the ability to send photos and videos, and contact and location sharing via Bluetooth. Users can also perform such tasks as calling a cab, buying a plane ticket, viewing bank statements and meeting new friends around their location. It offers the ability to make peer-to-peer payments, and is establishing itself as a social network.
Around 83% of WeChat users have purchased products online, and 200 million user credit cards are stored in the app. WeChat's payment and commerce features enable users to pay bills or a friend, and to buy items online.
Perhaps most importantly for investors, the app has made it easier for advertisers to target their desired audiences. A WeChat 'Moments' feature, which is a social network feed inside the app that uses performance-based advertising technology, tracks customer behavior. It allows brands to market their products and services directly to consumers, which keeps them returning to the app.
WeChat offers a potent combination of services. It isn't making things easier for its competitors.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.