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Facebook shares rose in premarket trading after the tech giant unveiled its part in a new digital currency, or so-called “cryptocurrency,” that will be known as Libra.
The company is the leader of a group of companies and organizations that is building Libra. The cryptocurrency is expected to launch in the first half of 2019.
Facebook’s stock climbed 1.7% in premarket trading from Monday’s close of $189.01 a share.
Wall Street has been bullish on the announcement, with Facebook analysts expressing optimism beforehand about what the cryptocurrency could revolutionize the company’s digital businesses. SunTrust’s social media analyst wrote that Libra “has the potential of putting the company front and center in areas beyond advertising,” while RBC analysts said it “may prove to be one of the most important initiatives in the history of the company.”
Facebook plans to profit from Libra through its new subsidiary Calibra, which will create a digital wallet to store and exchange the cryptocurrency.
One key use Facebook touts for Calibra is cross border payments, also known as remittances. Instead of paying banks fees to transfer money from one country to another, Calibra will allow people to transfer funds between local currencies and Libra.
Additionally, with this launch, “Facebook has its eyes set on becoming the world’s leading e-commerce platform as well,” analysts with Moffett Nathanson said in a note.
The e-commerce opportunity for Facebook comes through its steadily advancing users’ ability to buy and sell directly on the company’s platform. Libra is another step in the plan CEO Mark Zuckerberg laid out recently to expand Facebook’s e-commerce offerings.
— With reporting by Michael Bloom
