Facebook Has Set Big Ambitions For Digital Wallet But Ark Says Plan Looks Easier In Theory Than Practice

The growing buzz around Facebook Inc’s FB Novi wallet has not escaped the notice of Cathie Wood-led Ark Invest, which expounded on the struggles of both Novi and the associated cryptocurrency Diem.

What Happened: Ark analyst Max Friedrich observed in Ark's latest newsletter that Novi plans to go-to-market with free person-to-person payments available within the United States and abroad.

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The analyst also took stock of further expansion plans to be ushered in on reaching a scale that includes offering financial products and services. “Plans perhaps easier in theory than in practice,” the analyst wrote on Facebook’s efforts.

Backing his argument, Friedrich cited the example of Facebook Messenger, which offered free person-to-person payments without sizable success in the U.S. and other countries.

The analyst also touched on Facebook-backed Diem cryptocurrency.

“We believe Novi probably should launch Diem not in well-developed payments markets but instead in the cost-prohibitive remittances markets between developed and emerging currency corridors.”

Why It Matters: Last week, Diem co-creator and head of Facebook Financial David Marcus, refueled the buzz around the social media giant's cryptocurrency foray, saying that Facebook is looking at ways to enter the NFT space.

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“When you have a good crypto wallet like Novi will be, you also have to think about how to help consumers support NFTs,” he said at the time.

The Novi wallet, as per Marcus, is ready to launch but the launch is, reportedly, on hold as Diem awaits approval from regulators.

Diem, which is backed by fiat currency, along with Novi has struggled as Facebook faced political backlash over privacy, censorship, and other data-related issues, Friedrich noted.

NFTs have been booming this year with OpenSea a marketplace for such digital collectibles seeing its Gross Merchandise Value (GMV) rise from $1 million a year ago to $2 billion currently.

Price Action: On Monday, Facebook shares closed 2.15% higher at $380.66 in the regular session.