Facebook shares could be positioning themselves for a surge soon. But the market continues to wait and see. The stock rose 1.82% to $172.69 apiece --abeit on light volume -- after Nomura analyst Mark Kelley said Instagram Stories engagement could accelerate more rapidly than previously expected. Investors are currently watching the development of Instagram, as the stock has inched higher every few weeks in 2019.
Now, there could be another growth driver in the tech behemoth's engine.
Facebook wants to get into the payments business, and the upside potential is huge. Barclays analyst Ross Sandler wrote in a note out Monday morning that the total revenue opportunity could be $21 billion by 2021. His base case says $3 billion.
"If Facebook Coin proves successful in reinvigorating FB's micro-payment strategy for digital content distribution, we see as much as $19B in additional revenue in our "upside case" by 2021," Sandler said. Sandler acknowledged that creating a premium value proposition could be hard for Facebook, as the digital payments space is relatively competitive. PayPal (PYPL) - Get Report is a dominant player, with a market cap of $114.42 billion. Square (SQ) - Get Report is also a considerable player in the payments. Apple's (AAPL) - Get Report Apple Pay is also emerging.
Jim Cramer's Action Alerts Plus Portfolio Analyst Zev Fima mentioned that some total market forecasts on the digital payments space are $100 trillion several years from now, and that even if Facebook captures a sliver of the crowded market, the new segment could be a material revenue driver.