Social media companies made over $11B in advertising revenue from kids, Snap makes two ad deals 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.
PRICES ON THE RISE:
TikTok on Wednesday told sellers it will begin taking a larger share of the sales made on its app by raising the commission it charges on most items to 8% over the next few months from the current structure of 2% plus 30c per transaction, The Information’s Theo Wayt and Ann Gehan reported. Meanwhile, TikTok Shop has started cutting some subsidies for merchants that sell on the app, the authors said, citing a person familiar with the matter.
SNAP AD PACTS:
Entravision (EVC) has entered into a sales partnership with Snap (SNAP). The partnership aims to leverage Snap’s advertising solutions and consumer reach in emerging markets such as South Korea, Vietnam and the Philippines. Snapchat continues to grow its community and business operations across Asia-Pacific and this strategic partnership with Entravision will enable brands in these new markets to engage with Snapchatters around the world. Through innovative technology and advertiser solutions, Snapchat allows brands and marketers to connect with 750M users per month.
Separately, Samba TV announced a strategic partnership with Snap. To help brands further understand the value of advertising on Snapchat, the social media company tapped data and measurement provider Samba TV to provide outcome measurement to Snap advertisers in the entertainment vertical. Samba TV is the only measurement company with a global footprint, more than 200 national networks in the U.S., local networks in more than 100 U.S. DMAs, as well as more than 400 digital publishers.
Guggenheim said Snap’s December global Ads Manager audience reach increased 6.8% year-over-year to 669.3M, reflecting a modest growth deceleration. The December data suggests softer Q4 usage trends, which is consistent with Snap’s guidance, the firm told investors in a research note. The firm keeps a Buy rating on the shares.
SHARE SALE:
In a regulatory filing, Meta Platforms (META) disclosed that its chief product officer Christopher Cox sold 10,000 shares of common stock on December 28 in a total transaction size of $3.6M.
CHILD CASH COW:
According to a study by the Harvard T.H. Chan School of Public Health, social media firms collectively generated more than $11B in U.S. advertising revenue from children last year, Business Insider’s Kelsey Vlamis reported, citing the study. The researchers argued the findings show the need for government regulation as there are too many financial incentives at play for firms to take meaningful action. According to the study, YouTube (GOOG) made the greatest ad revenue from users 12 and under at $959.1M, followed by Instagram at $801.1M and Facebook at $137.2M.
Wells Fargo noted that Snap and Pinterest (PINS) had moved to the top of the firm’s Overweight list with company-specific drivers for revenue acceleration in 2024. Wells still sees upside to Meta 2024/2025 EPS but watches revenues decelerate in 2024, especially in the second half of the year. Additionally, the firm expects rising competitive/regulatory risks for Alphabet (GOOGL).
Cantor Fitzgerald upgraded Sprout Social (SPT). The year 2023 was filled with a lot of noise, mostly stemming from management’s decision to put through price increases and effectively force small, low-paying customers off of the platform, which resulted in Sprout’s total customer count declining by more than 2,000 through the first nine months of 2023, the analyst noted. The firm expects Sprout’s story to become much cleaner in 2024, which makes its current valuation attractive.
—
Originally Posted January 3, 2024 – #SocialStocks: TikTok to raise commission on sales made on its app
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from The Fly and is being posted with its permission. The views expressed in this material are solely those of the author and/or The Fly and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
