Meta ends restrictions on Trump’s accounts, Snap outs VP following complaints, and other notable stories from this week 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.
SHARE SALE:
Trump Media (DJT) was down over 11% following a share offering on Monday, The filing relates to the resale of 37.97M shares of common stock of Trump Media & Technology Group Corp. consisting of (i) 37.64M shares of the common stock by YA II PN, LTD., a Cayman Islands exempt limited partnership, (ii) 200K shares of common stock to be issued to Yorkville concurrently or within one business day of the filing of this registration statement as consideration for entering into the SEPA and (iii) 125K shares of common stock issuable to EF Hutton concurrently or within one business day of filing, as exclusive placement agent in connection with the transactions contemplated by the SEPA. This pushed back gains the stock made after the failed assassination attempt on former President Donald Trump.
FUTURE OF AI:
Nvidia (NVDA) founder and CEO Jensen Huang and Meta Platforms (META) founder and CEO Mark Zuckerberg will hold a public fireside chat on Monday, July 29, at the 50th edition of the SIGGRAPH graphics conference in Denver. The two leaders will discuss the future of AI and simulation and the pivotal role of research at SIGGRAPH, which focuses on the intersection of graphics and technology. Before the discussion, Huang will also appear in a fireside chat with WIRED senior writer Lauren Goode to discuss AI and graphics for the new computing revolution.
NO RESTRICTIONS HEADING INTO ELECTION:
Meta said it intends to remove restrictions it placed on former President Trump’s Instagram and Facebook accounts in an effort to ensure parity among presidential candidates ahead of the 2024 presidential election between Trump and incumbent President Joe Biden, Axios’ Sara Fisher reported. “In assessing our responsibility to allow political expression, we believe that the American people should be able to hear from the nominees for president on the same basis,” Meta president of global affairs Nick Clegg said in a statement. “In reaching this conclusion, we also considered that these penalties were a response to extreme and extraordinary circumstances, and have not had to be deployed,” he noted.
OUSTED:
Steve Hwang, Snap’s (SNAP) senior VP of partnerships and strategy, is leaving the social media company following a string of recent worker complaints to HR about him, The Verge’s Alex Heath noted, citing several people familiar with the situation. The complaints about Hwang, who worked at Snap for over a decade, were filed since he took over the company’s partnerships and content organization in February of this year, the author says. For example, one of the complaints alleging he told members of his team that he used to eat a street food cart called “Bin Laden’s” in New York City many years ago, while another complaint was about a female employee and an interaction about her rape whistle, the author added.
POWER FOR WYOMING DATA CENTER:
Black Hills (BKH) announced it will partner with Meta to provide power for its newest data center in Cheyenne, Wyoming, an area served by the company’s electric utility, Cheyenne Light, Fuel & Power Company, doing business as Black Hills Energy. Black Hills Energy serves its Wyoming data center customers through an energy procurement model which provides qualifying customers with solutions to meet their specific energy requirements. This is enabled by the Large Power Contract Service tariff, in place since 2016, and developed in partnership with one of the company’s early data center customers.
POTENTIAL SALE:
Anson Funds Management has amassed a stake in Five9 (FIVN) and is urging the company to consider a sale, people familiar with the matter told Reuters. The activist investor’s move comes on the heels of Five9 last year rebuffing an acquisition offer from Zoom Video (ZM), the report added.
SOLD:
In a regulatory filing, Meta Platforms disclosed that its general counsel Jennifer Newstead sold 905 shares of common stock on July 9th in a total transaction size of $483K.
Loop Capital downgraded Reddit (RDDT). The shares are now trading at 10-times Loop’s 2025 estimated revenue and approaching the price target, the analyst told investors in a research note. The firm said that even assuming likely upside to 2024 and 2025 estimates, it does not believe the upside reward meaningfully outweighs the downside risk. It says Reddit now trades at a significant premium revenue multiple to its peers, and that there will likely be selling pressure when the lockup expires on August 9. It cited valuation for the downgrade.
Loop Capital maintained same rating on Pinterest (PINS) as well same rating an on Snap. The firm issued a broader research note on Interactive Media & Services sector. The firm is bullish on a monetization recovery for the middle-cap social media names, with an adtech-driven rebound being supported by measurement improvements, the analyst noted. The expansion of third-party demand also represents a monetization vector unique to Pinterest, and monetization growth for the company is “bending up” as advertisers increasingly adopt lower funnel measurement solutions, the firm added.
Argus increased its price target on Alphabet (GOOGL). The company remains an “advertising juggernaut” despite the potential serious threats from competing generative AI platforms to its Search business and antitrust litigation/regulatory pressure, the analyst tells investors in a research note. Argus adds that Alphabet’s YouTube and Google Cloud are “doing just fine” as the company spikes investment in its own competitive AI applications and compute infrastructure as it races against Microsoft (MSFT) / Open AI and Meta to ensure its “future relevance”.
JMP Securities raised the firm’s price target on Reddit. JMP expects a broadly positive earnings season for digital advertisers as the macro feels relatively healthy, AI-powered ad tools are improving performance, and TikTok may be a share donor in Q2, the analyst said. The firm’s top pick is Reddit, given its engagement momentum, improved advertising tools and growing data sales business.
JPMorgan elevated its price target on Reddit. The analyst remains positive overall on the internet sector heading into Q2 earnings. The firm continues to prefer large-cap names, though it recognizes “pockets of concern” around elevated expectations, higher valuations, and potential slowdown in the second half of 2024 consumer spending. Reddit is likely benefiting from digital advertising strength and company-specific initiatives, while also having an achievable guide as a newly public company, the analyst said. JPMorgan raised numbers to reflect the OpenAI data licensing deal. However, the firm remains Neutral-rated, noting the upcoming lock-up expiration on the third trading day after the print, or August 9, could pressure the shares.
Barclays lowered the firm’s price target on Sprout Social (SPT) as part of a Q2 preview for on-cycle software names. Software is set-up for a “very binary Q2,” the analyst told investors. The firm commented this earnings season will be crucial for gauging the rest of the year. Its checks “are solid so there could be a come back story,” but currency “could spoil the party somewhat,” contended Barclays.
Wolfe Research initiated coverage of Meta as part of a broader sector note launching coverage of Global Internet names. Additionally, Pinterest and Snap were initiated with a Peer Perform at the firm. Meta is a must-have ad platform for most digital advertisers given its scale and should benefit from ongoing AI-led product developments that continue to drive user engagement and reach positive ROIs for advertisers, resulting in rising monetization and sustainable healthy topline growth at scale, the analyst said in a research note. The firm is positive on Pinterest’s ability to monetize its large user base with high commercial intent by offering a unique value proposition and platform developments to its users and advertisers, also noting that it has further monetization runway ahead and multiple long-term tailwinds including international expansion, product initiatives for advertisers, the analyst noted. Wolfe added however that it prefers to wait for a more attractive entry point or for leading indicators of the business to show sustainably robust growth rates before turning more constructive.
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Originally Posted July 17, 2024 – #SocialStocks: Trump Media experiences volatile week
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