New Mexico lawsuit alleges Snap ‘a haven for child abuse’, California Governor Gavin Newsom vetoes AI safety bill and other notable stories from this week
Welcome to “StockTok,” The Fly’s weekly recap of Wall Street’s reactions to social media stock news.
DATA SHARING PACT:
Meta Platforms (META) is launching a data-sharing partnership with UK banks to help prevent fraud as the social media platforms is increasingly pressured to help politicians and lenders do more to stop scams, Akila Quinio of The Financial Times reported. Meta recently said it has begun widely rolling out its Fraud Intelligence Reciprocal Exchange, a channel for banks to share transaction information with Meta to help catch scammers.
ANTITRUST LATEST:
A U.S. court has awarded Amazon (AMZN) a partial dismissal of an FTC lawsuit accusing it of illegal monopolies, in a sealed ruling whose details aren’t immediately clear, Reuters’ Jody Godoy wrote. The FTC will be allowed to continue to pursue any claims the judge did not permanently dismiss, court records show. The case against Amazon is one of five lawsuits where FTC and DOJ antitrust regulators are also suing Meta, Apple (AAPL), and Google (GOOGL).
NEW FINANCE CHIEF:
Zoom Video has appointed Michelle Chang as its CFO, effective October 7. Chang brings more than 25 years of experience in financial leadership roles, most recently serving as Corporate VP and CFO of Microsoft’s (MSFT) Commercial Sales & Partner Organization. Chang will succeed Kelly Steckelberg, who will continue to serve in an advisory capacity until the announcement of financial results for Zoom’s Q3 ending October 31.
VIETNAM INVESTMENT:
Meta Platforms plans to expand its investment in artificial intelligence innovation in Vietnam, including the production of its latest mixed reality headsets from 2025, Reuters noted. It is not yet known what the size of the investment will be.
ALLEGATIONS OF GROWTH OVER SAFETY:
A lawsuit filed by New Mexico against Snap (SNAP) in September alleges the company’s product features and enforcement gaps have made its platform a haven for child abuse and blackmail, The Wall Street Journal’s Jeff Horwitz reported. The state accuses Snap of giving priority to growth over safety, with internal documents cited by the suit finding that a rough internal analysis in November 2022 found that Snap was receiving 10,000 reports of “sextortion” each month. New Mexico previously sued Facebook and Instagram parent Meta over child safety failures. Snap issued the following statement in response: “We designed Snapchat as a place to communicate with a close circle of friends, with built-in safety guardrails, and have made deliberate design choices to make it difficult for strangers to discover minors on our service. We continue to evolve our safety mechanisms and policies, from leveraging advanced technology to detect and block certain activity, to prohibiting friending from suspicious accounts, to working alongside law enforcement and government agencies, among so much more. We care deeply about our work here and it pains us when bad actors abuse our service. We know that no one person, agency, or company can advance this work alone, which is why we are working collaboratively across the industry, government, and law enforcement to exchange information and concept stronger defenses.”
NEW FEATURE:
Snapchat’s “Footsteps” feature is becoming available to all iOS users this week, the company confirmed to Tech Crunch on Monday, according to Aisha Malik. The feature which was available exclusively to Snapchat+ subscribers, in the past “uses Snap Map to let you see how much of the world you’ve explored and track where you’ve traveled to,” added the TC story.
STREAMING EXPANSION:
Trump Media (DJT) announced that its custom-built content delivery network, or CDN, is now operating from multiple sites across the country. The company said that the expansion transforms Truth Social’s CDN-which powers the company’s Truth+ TV streaming service-into a more sophisticated distributed content network, with streaming content originating from multiple geographic locations.
AI SAFETY BILL VETOED:
California Governor Gavin Newsom on Sunday vetoed a contested artificial intelligence safety bill after the tech industry raised objections, saying it could drive AI companies from the state and hinder innovation, Reuters’ David Shepardson and Anna Tong wrote. Newsom said the bill “does not take into account whether an AI system is deployed in high-risk environments, involves critical decision-making or the use of sensitive data” and would apply “stringent standards to even the most basic functions – so long as a large system deploys it.” The bill faced strong opposition from a wide range of groups.
SHARE SALES:
In a regulatory filing, Meta Platforms chief legal officer Jennifer Newstead disclosed the sale of 905 class A common shares of the company on September 24 at a price of $567 per share. Last week, Meta chief product officer Christopher Cox sold 10K shares of common stock on September 23 in a total transaction size of $5.7M. Separately, Andrew Litinsky’s United Atlantic Ventures disclosed a 0% stake in Trump Media & Technology Group. United Atlantic sold its over 7.5M share stake in the company.
ENTRANCE INTO NEURAL WEARABLES:
Wearable Devices applauded Meta’s entrance into the gesture control space with its announcement at Meta Connect 2024. “Welcome, Meta. Seriously,” declared CEO Asher Dahan. “Competition only fosters innovation, and we are encouraged to see Meta’s nascent commitment to the neural interface sector which we at Wearable Devices have been advancing and perfecting for over a decade. Meta’s new move into this field validates the immense potential and growing importance of neural control. Clearly, we at Wearable Devices have been onto something big all along as the trailblazers in neural wearables, and we look forward to continuing to push boundaries alongside other key players in the space.”
Pivotal Research initiated coverage of Meta Platforms. Meta is the dominant social media company in the world with 3.3B daily active users, the analyst told investors in a research note. The firm sees a “strong” revenue growth outlook from increased usage, new products, better targeting and higher prices, boosted by cost efficiencies and eventually materially declining Reality Labs losses combined “with what appears to be an attractive valuation.”
Wells Fargo raised the firm’s price target on Meta and reiterated the same rating on the shares ahead of its earnings report. The firm sees another robust quarter and solid forward quarter guide, but unlikely to materially alter Wells’ above-consensus 2025 EPS estimate of $27-plus. The stock is increasingly viewed as AI winner, but it’s likely range bound until 2025 OpEx/CapEx guide on Q4 2024 EPS call, the firm added.
Goldman Sachs added Pinterest (PINS) to the firm’s Americas Conviction List as part of its monthly update. The firm believes the company is set up well to continue to compound sales growth at a mid-to-high teens percentage pace and drive steady adjusted EBITDA margin expansion for the next five years.
Monness Crespi boosted its price target on Meta following last week’s Connect 2024 event. The company unveiled a collection of artificial intelligence and metaverse innovations that will drive more engaging experiences for users, usher in new opportunities for advertisers, attract more developers to the platform, expand the reach of the Meta universe, and increasingly diminish the relevance of smaller platforms, the analyst tells investors in a research note. The firm believes Meta is well positioned to benefit from the digital ad trend, expand the reach of its platform, innovate with AI, and leverage a leaner cost structure.
Roth MKM kept the same rating on Meta Platforms after attending the company’s Connect conference keynote by CEO Zuckerberg. The key event was marked by Zuckerberg showing off AR prototype glasses after working on them for 10 years, and with 50% of Reality Labs’ spend having been earmarked to AR, the next couple of years could see slower growth in incremental spend, the analyst noted. The firm further added that 2024 could also mark a “peak” segment operating loss margin year for Reality Labs.
Rosenblatt upped the firm’s price target on Meta Platforms. The Connect 24 conference highlighted how Meta is “uniquely delivering category products that could be described as leading in consumer adoption,” the analyst told investors. The firm said the event also highlighted how Meta is continuing to advance its artificial intelligence capabilities. Rosenblatt believes Meta’s AI capabilities are part of a positive inflection in the company’s core advertising business that is still not fully captured in the shares. Meta’s growth merits a higher multiple, says the firm, which raised its Street-high price target to $811, assuming Meta can trade in a year at an Apple-like multiple of 30-times forward earnings.
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Originally Posted October 2, 2024 – StockTok: Zoom Video names Michelle Chang CFO
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