Facebook Inc (NASDAQ:FB) will launch a “want” button in 2013 to further their commercial ambitions according to a new report from Piper Jaffray. The move could bring the company $10 billion in revenues by 2015. The report places a twelve month price target of $38 on the company’s stock.
With Facebook Inc (NASDAQ:FB) shares currently trading at just over $26, that price target means just under 50% return in twelve months, nice work if you can get it. Facebook shares debuted in May, and were priced at $38.
That, of course, assumes the company will reach the price target assigned by Gene Munster, the Piper Jaffray analyst who authored the report. According to Munster, Facebook Inc (NASDAQ:FB) will manage to boost its revenue by taking a chunk of online commerce.
The want button, which will allow users to directly pick out products that they are likely to buy. The move, according to the report, would boost advertiser spending on the social network, improving the quality of the advertising and the amount of advertisers seeking to use the platform.
The report cites a figure from Google Inc (NASDAQ:GOOG) in order to estimate Facebook’s likely revenue from an increase in commercial prominence. In 2011, Google Inc (NASDAQ:GOOG) said it impacted $80 billion worth of purchases with its online platform.
According to the report that number should be doubled to take into account the company’s worldwide impact. Google Inc (NASDAQ:GOOG) revenue was $38 billion in 2011. That corresponds to a25% from the company’s assumed commercial impact of $160 billion.
Facebook Inc (NASDAQ:FB), according to the analysis, could take a 25% share in that market by 2015. $10 billion in commerce related revenue by 2015 would correspond to the dreams of many Facebook Inc (NASDAQ:FB) investors.
The company has a substantial opportunity for growth in the commercial sector in the opinion of the Piper Jaffray, and the contribution of that sector will begin as early as next year.
Supplementing and complementing the want button and other commerce driven initiatives is the new partnership the firm has forged with Datalogix, an online information gathering service. The partnership will allow Facebook to track the effectiveness of advertising methods in generating offline trade.
The ability to present possible advertisers with data on offline purchases made by customers will help Facebook Inc (NASDAQ:FB) seal those partnerships, particularly in dealing with purchases consumers are unwilling to complete online.
In the smartphone sector, many customers prefer to enter stores in order to get their hands on the product they are considering buying. Facebook now has a way to more effectively track these purchases and relate them to the social network’s influence.
According to the company, Samsung spent $10 million advertising its latest premium smart phone, the Galaxy S III. That investment generated $129 million in related sales. If the firm manages to collect data more efficiently than Google Inc (NASDAQ:GOOG), its major competitor, it will begin to steal advertising revenues away from the company.
Facebook Inc (NASDAQ:FB) has an interesting but tough year ahead. The company needs to substantially boost revenue in order to meet the expectations of the market. If it does not, it could face a quick and harsh backlash from investors and advertisers alike.