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PayPal, Visa Could Be In Talks About A Possible Partnership: Analyst

PayPal ( PYPL )and Visa ( V ) apparently are in talks about a possible partnership, but whether the companies can reach an agreement remains to be seen, investment bank SunTrust said Wednesday. At the moment, PayPal attempts to push its customers into using cheap funding sources such as direct access to bank accounts and funds stored in PayPal accounts. But, should the company strike a deal with Visa (or MasterCard ( MA )) and present credit cards as an equal option, the company would likely see a $300 million transaction-expense increase, SunTrust analyst Robert Peck wrote in a research note. To offset the increased expense, Peck says PayPal would have to either negotiate for some kind of expense offset, see a 7% lift in payment volume funded by credit cards, or see a 3% lift in volume from its cheapest funding sources. San Jose, Calif.-based PayPal, through a spokesperson, declined to comment. PayPal stock was up about 2%, below 39, in afternoon trading on the stock market today . PayPal found support at its 50-day moving average Wednesday, a positive move just when the stock needed one. The stock is still below a buy point at 40.03 but above a 38.62 entry. The company has an IBD Composite Rating of 91, where 99 is the highest, putting it among the top 9% of all stocks on key metrics such as earnings and sales growth. In his research note, Peck upped his price target on PayPal stock to 44 from 38, citing better market conditions. Peck maintained a buy rating on the stock. Peck says that there are “breadcrumbs” that indicate a solid Q1 for the company. PayPal is set to report results April 27 after the close . Last week, e-commerce leader  Amazon.com ( AMZN ) announced new features for its languishing payments platform that take aim at PayPal, and rivals such as Square ( SQ ).

Facebook Revs Engine On Multibillion-Dollar Market Opportunities

A series of announcements by Facebook ( FB ) at its conference for developers this week puts the company on a solid path toward adding billions to its revenue stream. CEO Mark Zuckerberg set a 10-year strategy for Facebook on Tuesday that emphasized pushing its Messenger chat platform deeper into the business world with chatbots and by enhancing Live video with virtual reality. Zuckerberg presented his vision in a keynote speech at the start of Facebook’s two-day F8 Developer Conference on Tuesday in San Francisco. Analysts say the monetization strategy of Messenger will closely follow that of Instagram, with both platforms seen becoming multibillion-dollar businesses. That will be followed by its Oculus Rift virtual reality business and its WhatsApp messaging platform. “We see Facebook’s revenue growth visibility being enhanced by Instagram this year, Messenger in 2017, and more mass-market virtual reality and maybe WhatsApp by 2018,” wrote Rosenblatt Securities analyst Martin Pyykkonen in a research note Wednesday. He estimates Instagram’s ad revenue will reach $1 billion this year. “It’s still very early, but Messenger could become that single app interface for multiple mobile payments and be a competitive issue for the likes of PayPal ( PYPL ), Square ( SQ ) and credit card companies,” he wrote. Cowen analyst John Blackledge wrote in a research note that, given Messenger’s sheer user scale, it could potentially be another transformational platform for Facebook. Messenger has 900 million users, up from 800 million in January. “Facebook will continue to follow its proven playbook of building great products, achieving scale and then building ecosystems around those products/apps in order to monetize,” Blackledge wrote. Facebook Messenger Can Be Added Feature For Ads Facebook provided a glimpse as to how it might monetize Messenger at the F8 conference. Examples included businesses placing an ad on Facebook and then, when the ad is clicked, the user is taken over to Messenger, where that user can communicate with the company and transact on the platform. As widely expected, Zuckerberg announced a program for developers to write apps that are powered by artificial intelligence, known as chatbots. The digital assistants will help Messenger users communicate with businesses for services, perhaps to fix a problem or to buy goods. Demonstrations on how bots will be used by businesses included ordering flowers through the chatbot of 1-800-Flowers ( FLWS ). Facebook highlighted over 40 existing partnerships that included Shopify ( SHOP ) and Hyatt Hotels ( H ). While ads and promotions are not currently allowed in the bot platform, Facebook has begun testing “Sponsored Messages” in small groups. Facebook also said it will be able to earn revenue through “Click to Message” links in News Feed ads. Another major focus at the F8 conference is on live video streaming, which generates 10 times more comments than regular videos. Facebook is already pumping up revenue from standard video ads placed on its website. The addition of Facebook Live video will accelerate that opportunity. Blackledge estimates Facebook video revenue will hit $10 billion by 2021, up from $1.8 billion last year. Facebook Live is comparable to the Twitter ( TWTR ) Periscope app, which launched last year and has logged more than 100 million broadcasts. Twitter has integrated Periscope into the Twitter app feed. The vast majority of Facebook revenue comes from ads on its main website, but the company is looking to build on that with Instagram, Messenger and Live. “Messenger is clearly increasingly important, in our view, but its vision of the post-app world will be a challenge to pull off,” wrote Pacific Crest Securities analyst Evan Wilson in a research note. “It has a real opportunity with Live video in the near term.” Facebook stock was down more than 2%, near 108, in early afternoon trading in the stock market today . Facebook is set to report Q1 earnings after the market close on April 27. Analysts expect revenue will rise 48% from the year-earlier quarter to $5.25 billion, while earnings per share minus items also are expected to rise 48%, to 62 cents.

Jury Out On Whether Ad Blocking A Help Or A Hurt To Programmatic

The jury’s still out on whether ad blocking will help or hurt the expansion of programmatic advertising, a survey of U.S. marketers has found. Wall Street has expressed off-and-on concern that Apple ‘s ( AAPL ) decision to let users install apps that prevent ads from appearing in its Safari mobile browser could cut into the business of ad-tech companies, but an industrywide decline has not materialized. A March survey by investment bank RBC Capital Markets and Advertising Age found that 58% of respondents believe ad-blocking technology will have a “somewhat negative” effect on the programmatic advertising ecosystem. Another 20% of respondents said ad blocking will have a “significantly negative” effect on the programmatic advertising space, said the survey, which was reported by research group eMarketer on Wednesday. Still, some marketers believe ad blocking could be good for programmatic, with 6% of the marketers surveyed saying ad blocking would have either a “significantly positive” or “somewhat positive” effect on automated ad buying. Even so, some senior ad buyers in the U.S. are bracing for trouble as programmatic advertising expands. The RBC survey found that 57% of ad buyers listed multidevice measurement as a problem for programmatic, followed by fraud (47%), ad blocking on smartphones (35%) and privacy issues (18%). Gaming, social networking and tech-related websites are said to be most affected by ad-blocking software. Gaining Steam Seven months after Apple made ad blocking possible on iOS mobile phones , eMarketer says that the trend is gaining steam. That could mean companies including Alphabet ( GOOGL ) search unit Google, French ad firm Criteo ( CRTO ) and others that rely on advertising to make money aren’t totally in the clear, though they’ve said that ad blocking isn’t affecting their business. Ad sales conducted by machines rather than ad salespeople — so-called programmatic ads — take less time to execute and cost advertisers less, which accounts for their popularity with advertisers, though it tends to lower revenue for online-ad platforms. Ad blockers serve to reduce the amount of bandwidth that a user needs by cutting down the amount of content — seen and unseen — that a page has to load. They can also help with privacy by blocking programs that track users’ browsing habits — good for users, bad for advertisers who want to show their ads to people who are the most likely to buy their products. Mobile is driving programmatic advertising growth, with mobile accounting for more than two-thirds of all programmatic digital display-ad spending this year, says eMarketer in a report on Tuesday. Facebook ( FB ), Google-owned YouTube, LinkedIn ( LNKD ) and others are helping to drive the trend. Declining Growth Rate U.S. programmatic digital display-ad spending is projected to rise to $27.4 billion in 2017, up 24%, eMarketer said last week. But that growth rate is declining from a projected 39% this year and 53% in 2015, the research group said. Mobile programmatic spending will reach $15.45 billion in the U.S. in 2016, representing 69% of all programmatic digital display-ad spending, according to eMarketer. That’s up from 60% in 2015 and 46% in 2014. Apple stock climbed 1% in midday trading in the stock market today , near 112, and is up more than 20% since touching an eight-month low early this year. Alphabet stock rose by a fraction, near 770 and approaching a cup-with-handle breakout buy point at 777.41.