Apple and others question U.K.’s Online Safety Bill, Canada pushes media compensation, and other notable stories from this week.
Welcome to “#SocialStocks,” The Fly’s weekly recap of Wall Street’s reactions to social media stock news.
MONEY IS THE MOTIVE:
TikTok blogged in part earlier: “Creators are at the heart of TikTok, driving creativity, culture and entertainment… To further recognize and reward creators for their creativity and drive the value of their content, we’re introducing TikTok Creative Challenge… TikTok Creative Challenge is a new in-app feature that allows creators to submit video ads to brand challenges and receive rewards based on video performance. Creators can browse through the list of challenges, read the challenge’s brief which displays the reward pool and details rules and requirements, and submit their video ad. The Creative Challenge gives creators full creative freedom over their ads, unlocking more opportunities for creators to collaborate with brands in a way that’s most authentic to them…Once enrolled in the TikTok Creative Challenge, creators will have access to a number of resources including a dedicated Creator Community group and Mentor Program to connect with other creators to share knowledge, exchange insights and get rewarded.”
TikTok is broadening its retail offerings as Beijing-based parent company ByteDance, is selling products through the “viral video app,” wrote Cristina Criddle and Qianer Liu for the Financial Times. In a move to compete with competitors like Shein and Amazon (AMZN). “In recent weeks, UK users have begun to see a new shopping feature within the TikTok app called “Trendy Beat”, a section offering items that have proven popular on videos, such as tools to extract ear wax or brush off pet hair from clothing,” added the FT story.
WHAT ABOUT THE CHILDREN?
Apple (AAPL) has raised concerns over portions of the U.K.’s Online Safety Bill that could be used to force encrypted messaging tools like iMessage, WhatsApp (META), and Signal to scan messages for child abuse material, BBC News’ Chris Wallace reported The tech giant has joined 80 organizations and tech experts in urging Technology Minister Chloe Smith to rethink such powers, the author says, noting Apple told the BBC the bill should be amended to protect encryption. Reference Link
NO THANKS:
Instagram is testing a feature that will block explicit images from appearing in direct message requests, following research that found trolls target high-profile women with abusive content through DMs, The Guardian’s Dan Milmo reported, citing a Meta statement. The trial will restrict users to one direct message request to someone who does not follow them and the request will be limited to text. “In practice, this means people will no longer be able to receive unsolicited images or videos from people they don’t follow,” said Meta.
MAUS:
WhatsApp Business has reached 200M MAUs, up from 50M in 2020, TechCrunch’s Ivan Mehta reported. Also, Mehta said WhatsApp Business users will be able to create “click-to-WhatsApp” ads without a Facebook account.
SCREEN TIME:
Meta said in a blog post: “Today we’re announcing new features to support teens and families and make it even easier to manage the time they spend on our apps. We’re bringing parental supervision to Messenger, so parents can see how teens spend their time and who they interact with on Messenger. We’re also introducing new tools to limit unwanted interactions in Instagram DM and Messenger, launching Quiet Mode on Instagram globally, nudging teens to set time limits on Facebook and giving parents even more ways to supervise their teens on Instagram… Today’s updates were designed to help teens feel in control of their online experiences and help parents feel equipped to support their teens. We’ll continue to collaborate with parents and experts to develop additional features that support teens and their families.”
META QUEST+:
In a company blog post, Meta said, “Whether you’re a seasoned VR gamer or new to the medium, it can be hard to know where to start when exploring the Meta Quest catalog. Luckily, we’re combining curation and convenience to make things a little easier. Now you can browse less and play more with Meta Quest+, your new VR subscription service. For just $7.99 USD per month or $59.99 USD annually, you’ll get access to two hand-picked VR titles every month. And when you sign up now through July 31, you’ll get your first month for $1 USD. With a combination of VR’s biggest hits, hidden gems, and back-catalog classics, this is the most affordable way to grow your library with killer content…On the first of each month, you’ll get two titles to redeem, enjoy, and master. First up, we’re pairing Cloudhead Games’ physical action-rhythm FPS Pistol Whip with the nostalgia-fueled arcade adventure Pixel Ripped 1995 from ARVORE Immersive Experiences. And for August, you can look forward to a uniquely compelling social VR experience in Mighty Coconut’s Walkabout Mini Golf and some frantic weapon-crafting and shooter action in MOTHERGUNSHIP: FORGE from Terrible Posture Games…Meta Quest+ is available for all owners of Quest 2 and Quest Pro headsets, and the service is forward-compatible with Quest 3.”
INSIDE JOB:
In a regulatory filing, Pinterest (PINS) executive chairman Benjamin Silbermann disclosed the sale of 130,000 common shares of the company on June 22 at a price of $26.0009 per share.
PAYING A FAIR SHARE:
Canada’s Parliament has approved a measure that would compel internet companies to compensate domestic media outlets for links to their articles, the Wall Street Journal’s Paul Vieira reports. Meta’s (META) Facebook had previously warned that such a law would force it to block access to news reports on its platform for Canadian users, while Alphabet’s (GOOG) Google also indicated it could potentially restrict its news content on search in Canada as a result of the measure, the author notes. Prime Minister Justin Trudeau said the government had no intention of backing down and even accused Facebook and Google of deploying bullying tactics to block the law, the author notes.
REPAIRS NEEDED:
Twitter (TWTR) CEO Linda Yaccarino intervened to repair the company’s relationship with Google Cloud (GOOGL) over payments, The Wall Street Journal’s Alexa Corse and Miles Cruppa noted. Sources say the bills were more than $20M per month and that the companies are now in discussions about a broader partnership that could include Google’s ad spending on Twitter and Google’s use of Twitter’s API.
ANALYST COMMENTARY:
Wells Fargo upgraded Pinterest to Overweight from Equal Weight. The firm said the company’s Amazon partnership going live ahead of the 2023 holidays, improving engagement trends and higher advertising load will allow Pinterest to deliver “accelerating and above-consensus” revenue growth. Wells Fargo sees a “strong catalyst path” for the shares over the 12 months. The firm expects Pinterest’s Q3 revenue guidance accelerating to low double digits versus 7% year-over-year in Q2 on impression growth accelerating, improving end-market trends and “Premiere Spotlight.”
Wells Fargo raised the firm’s price target on Meta Platforms and keeps an Equal Weight rating on the shares ahead of quarterly results. The firm leaves Q2 revenue unchanged and modestly increases FY23/24 revenues on Reels and Advantage+. The firm expects Q2 revenue at high-end of guidance, in-line with buy-side expectation and ahead of Street consensus $31B.
Citi analyst raised the firm’s price target on Meta and reiterated a Buy rating on the shares. Citi’s tracking shows Reels ad loads reaching 17% quarter-to-date and the firm believes the broader online advertising market is “stable-to-improving,” the firm told investors in a research note. As such, Citi raised its 2024 advertising projections and price target on it’s top-pick Meta. It believes Reels is experiencing greater advertiser adoption given its “Lo-Fi” approach to ads, newer ad products, and continued engagement growth. The firm says Meta’s monetization is improving.
UBS raised the firm’s price target on Meta and backed a Buy rating on the shares. The firm expects Meta to integrate generative artificial intelligence broadly into its apps and increasingly be viewed as an “AI winner, providing another leg to the bull case.” There has been chatter of Meta AI tools, but investor conversations have focused narrowly on the advertising tech angle and less around consumer applications that could drive new engagement and ad units, UBS told investors in a research note. UBS does not think this is priced into shares currently. Meta remains the analyst’s top pick, and the firm expects the impending move back into the Russell 1000 Growth Index to cause growth investors to revisit the story.
Roth MKM analyst Rohit Kulkarni raised the firm’s price target on Amazon.com and kept a Buy rating on the shares. The analyst names Amazon the firm’s top internet mega cap pick, followed by Meta Platforms and Alphabet. Roth views all three mega caps as “significant medium-term beneficiaries” from the ongoing generative artificial intelligence wave.
Roth MKM raised the firm’s price target on Meta and reiterated a Buy rating on the shares. Top 3 Mega Cap Internet stocks should be significant medium-term beneficiaries from the ongoing Generative AI wave, and despite the year-to-date stock price action, Meta Platforms shares remain reasonably valued, the analyst tells investors in a research note. The firm adds that its industry and channel checks hint at continued improvement in Meta’s ad engine, along with likely incremental ad allocations returning from TikTok over the past six months.
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Originally Posted June 28, 2023 – #SocialStocks: TikTok aims to reward creators and further retail offering
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