StockTok: Meta concedes to EU regulators, to face antitrust trial in the U.S.

Baidu enters smart glasses market, Trump may prevent TikTok ban and other notable stories from this

Welcome to “StockTok,” The Fly’s weekly recap of Wall Street’s reactions to social media stock news.

AD DOLLARS:

Meta Platforms (META) plans to launch ads on Threads early next year, in an effort to cash in on the app’s swift growth, The Information’s Sylvia Varnham O’Regan and Kalley Huang reported.

ANTITRUST LATEST: 

After US District Judge James Boasberg threw out some allegations by the U.S. Federal Trade Commission, FTC, Meta will face a scaled-back antitrust trial over its alleged dominance of social networking, Leah Nylen of Bloomberg wrote. Boasberg narrowed the case by accepting Meta’s arguments that some of its restrictions on its Facebook platform had legitimate business justifications. Back in 2020, the FTC sued Meta alleging the company illegally dominated the U.S. personal social-networking market by buying up emerging rivals, such as Instagram and WhatsApp.

NEW COMPETITION: 

Baidu (BIDU) has unveiled smart glasses, powered by its Ernie LLM, that will “become a private assistant” by tracking calories, playing music, and more, The Financial Times’ Eleanor Olcott reported. Li Ying, head of Baidu’s hardware brand Xiaodu, unveiled the glasses, which are expected to go on sale next year, during an event in Shanghai on Tuesday. The company’s entry into smart glasses comes as U.S. companies Meta (META) and Snap (SNAP) are seeking to dominate the market outside China.

TO BAN OR NOT TO BAN: 

President-elect Donald Trump is expected to attempt to halt a potential ban on social media app TikTok, which faces an early 2025 deadline to find a non-China-based owner, The Washington Post noted.

ACTIVIST INVESTOR: 

Valueact has taken a $1B stake in Meta Platforms, CNBC’s David Faber reported on-air on the business news network.

MARKETING PACT: 

Reddit (RDDT) announced a preferred partnership with InMarket, a provider of real-time marketing and measurement. Utilizing InMarket’s Lift Conversion Index, or LCI, Reddit advertisers in the U.S. can optimize their campaigns inflight and measure the real-world impact of their advertising efforts, like Visit and Sales lift, to maximize campaign effectiveness. InMarket’s LCI provides data-driven reports analyzing the holistic impact of Reddit campaigns.

THUMZUP: 

Thumzup Media announced the beta launch of its video capabilities, including integration with Instagram Reels The company said, “The addition of our new video posting feature provides users with multiple ways to engage and share content, building upon its successful track record with single-photo posts. To date, the platform has facilitated more than 23,000 paid posts and paid its creators/users approximately $230,000. The beta launch allows Thumzup to gather both advertiser and user feedback and fine-tune the video experience before a full-scale rollout. This strategic approach will ensure a seamless and rewarding experience for both creators and advertisers by allowing click-through capabilities and in-video purchasing as well as more data sets.”

APPEASING EU REGULATORS: 

Meta said it will significantly reduce the price of subscription for no ads and offer people in the EU an additional new choice to use Facebook and Instagram for free with less personalized ads. “In the less personalized option, we will use significantly less data to show ads, so ads may be less relevant to a person’s interests. We are implementing these significant changes in response to demands from EU regulators, even though the feedback goes beyond what is required in the law.” Studies show that people and businesses prefer personalized ads which support jobs and economic growth, and give people access to free online services, Meta said in a blog post. “We firmly believe that personalized ads are a vital component of the ad-supported internet that has enabled access to free online services for hundreds of millions of EU citizens and billions of people around the world. We will continue to advocate for regulations that support the responsible use of personalized advertising, allowing us to maintain the high-quality, free services that people have come to expect from us,” Meta added.

REACHING NEW HEIGHTS: 

Meta, OpenAI, Microsoft (MSFT), and other AI companies have created their own internal benchmarks for AI as new models approach or exceed 90% accuracy on public tests, The Financial Times’ Cristina Criddle wrote.

NOT FOR SALE: 

Shares of Trump Media (DJT) were up $2.76, or 10%, to $30.45 in Friday morning trading after President-elect Donald Trump stated in a Truth Social post: “There are fake, untrue, and probably illegal rumors and/or statements made by, perhaps, market manipulators or short sellers, that I am interested in selling shares of Truth. THOSE RUMORS OR STATEMENTS ARE FALSE. I HAVE NO INTENTION OF SELLING! I hereby request that the people who have set off these fake rumors or statements, and who may have done so in the past, be immediately investigated by the appropriate authorities. Truth is an important part of our historic win, and I deeply believe in it. Thank you for your attention to this matter.”

EARNINGS RECAP: 

Pinterest (PINS) shares were down 12% despite beating expectations in its third quarter earnings report last week. The company also provided Q4 revenue guidance in line with consensus. “We delivered another strong quarter with users reaching another all-time high of 537 million and revenue growth at 18%,” said Bill Ready, CEO of Pinterest. “Our AI investments are driving results by powering better personalized experiences and greater performance for advertisers, with our lower-funnel ad tools being the fastest-growing part of our business. Advertisers are increasingly relying on Pinterest to engage our growing audience who see us as a great place to find inspiration, curate and shop.” Roth MKM decreased its price target on Pinterest. Shares were down 12% as the company reported a small beat on Q3 revenue but missed on EBITDA expectations, and Q4 guidance came in below optimistic investor expectations, the analyst tells investors in a research note. Pinterest management also seemed upbeat about growing bottom-of-funnel ad revenue, AI-driven content recommendation, and Performance+ adoption, Roth MKM added. On the other hand, Wedbush upgraded Pinterest. The firm thinks the company is executing well against its user engagement and monetization strategies and remains on pace to deliver growth and profits in line with its multi-year guidance framework. Wedbush believes the reaction post Q3 results is “overdone,” with shares now trading for 11.6-times its 2026 adjusted EBITDA estimate for a business that is set to grow adjusted EBITDA at a 27% CAGR over the next three years.

Sprout Social (SPT) also beat expectations in Q3 and raised its full-year outlook as a result. “The Sprout team delivered a solid third quarter, driving 20% revenue growth and 31% growth in cRPO as we executed our strategy across key company metrics. Sprout continues to focus on product leadership and expanding our competitive position within the Enterprise segment as these customers leverage the power of Social to drive their digital strategies,” said Ryan Barretto, CEO. Canaccord lowered the firm’s price target on Sprout Social. The firm said they reported Q3 results that were at or above the high-end of guidance on all key metrics, and management commentary and key forward-looking metrics would suggest that it’s still a pretty tough bookings environment for Sprout.

ADDITIONAL ANALYST COMMENTARY: 

Morgan Stanley boosted its price target on Zoom Video (ZM). The firm expects to see modest topline upside driven by Enterprise, alongside a “more meaningful” operating margin and EPS beat given operating expense discipline and continued share repurchases, the analyst told investors in a Q3 preview note. Given the intra-quarter improvement in sentiment, the firm does not see Q3 as a “re-rating catalyst,” but leans “constructive” on the set-up in FY26, the analyst added.

KeyBanc cut the firm’s price target on Pinterest following Q3 results. The firm noted Q4 revenue guidance came in below expectations, and said it believes that will exacerbate concerns over Pinterest’s Investor Day growth targets, particularly as growth decelerates in Q1 2025 as Pinterest laps Easter Shift and Leap Year benefits. From KeyBanc’s perspective, this is a timing issue. Engagement is still solid, partnerships and new products are ramping, and eventually monetization should follow, the firm added.

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Originally Posted November 13, 2024 – StockTok: Meta concedes to EU regulators, to face antitrust trial in the U.S.