Meta Verified has BofA 'intrigued' over new potential revenue stream
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Meta Platforms' (NASDAQ:META) plan to test a new subscription service this week has BofA saying "We are intrigued" by some more aggressive action to grow company earnings.
The plan for Facebook and Instagram - "Meta Verified" - would let users verify their accounts using a government ID and aim for content creators to help increase visibility and reach, tapping a badge along with impersonation protection, added support and perhaps increased exposure in search and content.
The testing is starting at $11.99 per month on the web or $14.99 per month on iOS/Android.
"We are intrigued by this offering, which follows Twitter Blue and likely reflects demand for more services by Facebookâs creators," analyst Justin Post said. "However, audience size could be limited by the number of creators and influencers on Metaâs platforms."
Twitter had roughly 300,000 subscribers to its Twitter Blue, and Snap (SNAP) has 2.5M subs on its Snapchat+ service.
"Assuming Meta rolls out the service globally over the next 2-3 months with slightly better success and achieves a 0.4% [monthly active user] penetration ... Meta Verified could add up to ~12M subscribers by the end of 2023/early 2024," Post noted.
And assuming a globally consistent subscription cost, that could mean $1.7B in high-margin revenue next year - what could add up to a $0.32 bump to earnings per share (about 3%), at "marginal" incremental costs for verification and support.
It's part of more opportunities to diversify the revenue base over time, Post said, reiterating a Buy rating. BofA has a $220 price target, implying 29% upside.
Earlier reports noted Meta is set to keep pursuing a "year of efficiencies" with potentially thousands more job cuts likely.