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Despite impressive growth in the first quarter, Facebook faces significant legal fees. Although additional security costs will affect the company's operating margin, Facebook will likely attempt to offset these losses with its planned Facebook coin.
Facebook has certainly been at the heart of the controversy in recent years. The company has been criticized for its security and revenue model of selling user data to advertisers. Naturally, this reaction begins to affect its results.
Despite significant revenue growth in the first quarter, it looks like the holiday will be over soon. Legal costs and security spending are expected to increase significantly in the coming years to strengthen the platform. The end result is a fragile future for Facebook, which could very well lead to a fall in revenues.
However, the company is betting on a novel idea to avoid a drop in revenue: Facebook Coin.
Facebook coin to compensate for losses
Believe it or not, Facebook Coin will probably be extremely profitable for the social media giant.
According to a report of 11 March CNBCRoss Sandler, an badyst at Barclays, predicts that Facebook Coin will generate $ 19 billion in additional revenue by 2021.
Facebook Coin would thus provide the platform with a source of revenue outside of mere advertising, which has also been criticized in recent years. Facebook's own cryptocurrency will not only be an alternative revenue stream, it will also serve to restore the trust of its users.
The idea is not really new. Facebook has already tried to incorporate "Facebook Credits", a native payment option on its platform many years ago, and the idea has failed dramatically. Not only was the idea not interesting, but no real ecosystem was cultivated to make Facebook credits viable.
Same difference
The Facebook piece may very well be different. As a stable currency, it varies by currency, it will not fluctuate like Bitcoin (BTC). Facebook, however, seeks to make cryptocurrency the de facto payment option on the platform.
Each transaction with Facebook Coin would likely cost a small fee that could be a new source of revenue. As you can imagine, with such a large user base, Facebook Coin may well become the biggest revenue growth of the social media company over the years.
So while the current situation regarding legal and security costs for Facebook is bleak, Facebook Coin could simply provide the company a way out.
The launch of Facebook Coin is scheduled for the second quarter of 2019.
Do you think Facebook Coin could save Facebook's growing legal and security costs? Let us know your thoughts in the comments below.
Images courtesy of Shutterstock.
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