An Evercore analyst notes that Meta has a strong track record with its monetization initiatives across brands
Meta Platforms Inc. is stepping up its efforts to make money off of its hugely popular WhatsApp messaging service with advertising features and other options for businesses - and one analyst says this could translate to more than $10 billion in annual revenue within a few years.
Shares of Meta gained nearly 3% on Monday.
WhatsApp announced various new business features on Monday, including subscriptions to channels, promoted channels and advertisements in the status carousel. Businesses will be able to attract paying subscribers with exclusive channel content, boost the visibility of their channels and locate new potential customers through status ads.
Meta, then called Facebook, announced in February 2014 that it would be buying WhatsApp for $19 billion. At the time, the company said there were 450 million people using WhatsApp on a monthly basis, and 70% of those were active on the platform daily.
Now, WhatsApp has 1.5 billion people each day using its Updates service, which hosts channels and statuses, according to a company blog post Monday.
While WhatsApp has a huge audience that's only grown under Meta's ownership, Meta has been slow to monetize the service. It's had far more success with Instagram, which has become a huge moneymaker for the company. Instagram bears more similarities to Facebook, with people drawn to those platforms for opportunities to share and explore content. With WhatsApp, users are mainly there for messaging, though Meta previously introduced content-discovery features that have taken off.
With the latest updates, Meta said it doesn't intend to disturb the chat experience.
"These new features will appear only on the Updates tab, away from your personal chats," the company's blog post noted. "This means if you only use WhatsApp to chat with friends and loved ones there is no change to your experience at all."
Evercore ISI analyst Mark Mahaney estimates that if Meta gets just $6 in average advertising revenue per daily user from this initiative - a fraction of what's seen for the company as a whole - and grows usage of the Updates tab to 1.7 billion daily users from 1.5 billion, the new WhatsApp features could bring in about $10.2 billion in annual ad revenue for 2028. Meta could also add $5 billion or so in operating income.
"Meta has a proven track record of building new surfaces, monetizing them successfully, and ramping up profitability accordingly," Mahaney wrote. "Our strong guess is that WhatsApp Updates will add to its track record."
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