It’s no secret that Facebook Inc (Nasdaq: FB) and Snap Inc. ( SNAP) are competitors in the booming business of social media. However, Facebook may have taken the competition to the next level with its newly-launched independent Instagram messaging app.
Last week, the Verge reported that Facebook has begun testing a new stand-alone Instagram messaging app called Direct. Up to this point, Instagram users had been able to direct message each other via a separate page on the main app, but Facebook now appears to be looking to repeat the success it had by separating Facebook Messenger into its own app several years ago. Facebook users must now download the Messenger app in addition to the main Facebook app, and Instagram users may soon be forced to do the same with Direct.
[See: 7 of the Best Stocks to Buy for 2018.]
The unique Instagram app is part of Facebook’s push to grow advertising revenue by inserting ads into its chat apps. Bank of America analyst Justin Post says it’s bad news for Snap.
Post says the new Instagram Direct app has many of the same features as Snapchat’s app.
“The overall layout looks somewhat similar to Snapchat, less the Discover tab, and the Direct app appears to open directly to the camera,” he says.
Like Snapchat, Direct also has augmented reality features and photo filters.
Facebook recently reported that Instagram Stories, which many have said is a thinly veiled Snapchat rip-off, now has more than 300 million daily active users compared to only 173 daily active users for Snapchat’s app. In fact, Facebook says its Messenger app now has 300 million daily users as well.
[See: 7 Investment Fees You Might Not Realize You’re Paying.]
Post says the new Direct app is one of several standalone apps Facebook has launched or bought in recent months, including Facebook Local, Messenger Kids and recently acquired tbh.
“Direct may have higher importance, however, as it could capitalize on Instagram’s need for increased millennial engagement (given Facebook is not as strong in the category), while potentially impeding Snap’s renewed global expansion efforts,” he says.
For long-term investors, Post says Facebook is a better bet than Snap. Bank of America has a “buy” rating and $210 price target for Facebook. The firm has a “neutral” rating and $16 target for Snap stock.
More from U.S. News
6 Things to Know About Mark Zuckerberg’s Manifesto
9 Investing Myths That People Still Believe
8 of the Most Incredible Investments of the 21st Century
Facebook Inc (FB) Direct App Is the Newest Threat to Snap originally appeared on usnews.com
