Heard on the Street: Facebook’s cryptocurrency unveiling was widely anticipated, but bets on Libra catching on and generating meaningful revenue remain highly speculative.
The new cryptocurrency project by Mark Zuckerberg’s Facebook has analysts excited, but the exuberance may be premature. Photo: josh edelson/Agence France-Presse/Getty Images By Laura Forman June 18, 2019 12:47 pm ET Facebook FB -0.29% has been sweet-talking users with promises of privacy on its platform and new ad campaigns aimed at keeping them on the site. Now it wants them to trust it with their money.
Wall Street analysts were exuberant. Back in March, Barclays analyst Ross Sandler estimated cryptocurrency could bring in as much as $19 billion in revenue for Facebook by 2021. On Tuesday, RBC’s Mark Mahaney called Libra “a potential watershed moment for the company and global adoption of crypto.” Analysts like Mr. Mahaney see Libra as a growth driver to bolster what historically has been a business centered solely on advertising revenue.
It may be less an endorsement than a cheap way to cope with the fear of missing out, though. Those buying Facebook stock for the same reason should be more cautious. The promise of a global unified payments system taking off among Facebook’s established base of billions of users world-wide is compelling, yet many before it have failed.
But the full economic opportunity, including all of the ways Facebook and other members of the Libra Association might make money, remains unclear. Other questions include regulatory oversight for the currency and the potential for hackers, leaks, and crime to bring further reputational risk to Facebook.
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