Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
TWITTER DOUBLE UPGRADED: Yesterday, BofA Merrill Lynch analyst Justin Post upgraded Twitter (TWTR) two notches to Buy from Underperform and raised his price target on the shares to $39 after conducting a survey in early December of over 1,000 U.S. consumers ages 18-65. According to the survey, Twitter penetration increased to 48% of respondents and the percentage of users reporting decreased usage fell slightly. The analyst noted that improving metrics in the 18-29 demographic indicate more younger users are turning to Twitter. Post added that the survey suggested Google (GOOG, GOOGL) and Facebook's (FB) Instagram have the most positive usage trends, while the negative effects from Snap's (SNAP) redesign appear to have continued.
JPMORGAN BEST INTERNET IDEA: In a research note to investors, JPMorgan analyst Doug Anmuth named Twitter a best Internet idea for 2019, along with Facebook and Amazon (AMZN). The analyst noted that Twitter shares increased 20% in 2018 on "continued solid" daily active user growth, "significant" revenue re-acceleration following 2017 declines, and the company's first full year of GAAP profitability. Meanwhile, Anmuth noted that while investor sentiment on Facebook "remains negative here" in early 2019, he thinks the core Facebook business is "stickier than many think," adding that he believes the company's revenue deceleration is manageable and is earnings growth should accelerate into the mid-teens in 2020.
NBA STREAMING PACT: In other Twitter news, the social media company announced an agreement with AT&T's (T) Turner Sports and the National Basketball Association this week under which Twitter will live stream 20 NBA on TNT games on its platform this season. During the second halves of those games, viewers can watch the action through a single-player, isolated camera view, the NBA said. In addition, fans will vote on Twitter for the player they want to see featured during the live stream of select regular-season and playoff games airing on TNT as well as the 2019 NBA All-Star Game.
WSJ REPORT: Earlier this week, the Wall Street Journal reported that Facebook, Twitter, and YouTube have made a concerted effort to get input from hundreds of outside groups to help them police content with a growing number of groups leaning to the right. Facebook has privately solicited advice from conservative group Family Research Council and its president Tony Perkins, while Twitter CEO Jack Dorsey recently hosted dinners with conservatives, including Americans for Tax Reform president Grover Norquist and the added voices have created a new set of problems as posts that are hateful to one group may be considered fair game to others, according to the Journal.
SNAP RECS: At the start of the week, Pivotal Research analyst Brian Wieser downgraded Snap to Hold and cut his price target for the shares to $6 from $8, noting that concerns around employee churn are playing out. The analyst added that "significant" additional stock grants to key employees may be necessary despite their diluting effects. Meanwhile, Cowen analyst John Blackledge later in the week upgraded Snap to Market Perform from Underperform, saying he believes the stock's valuation is reasonable and that the company could benefit with ad spending expected to increase this year. The analyst maintained his $6 price target on Snap shares.