TikTok explores in-app sales in Europe, Facebook blocked from WhatsApp data in Germany, 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.
TIKTOK TESTS SALES FEATURE: ByteDance's TikTok is working with brands to test in-app sales in Europe, Coco Liu, Zheping Huang and Giles Turner of Bloomberg reported. This is a move that will put the company in direct competition with Facebook (FB) and provide another example of the combination of social media and online shopping. TikTok has begun working with merchants in markets including the U.K. on ways they can sell products directly to millions of users within the app, people familiar with the matter say. While sources noted TikTok's promotional shopping campaigns in the past, the current trials are reportedly a precursor to a broader launch of a global e-commerce service. The prototype so far is only visible to select participants and it remains unknown when the company will kick off the formal launch, the authors noted.
AG URGES ABANDONMENT OF INSTAGRAM FOR CHILDREN: New York Attorney General Letitia James sent a letter to Facebook CEO Mark Zuckerberg urging him to abandon plans to launch a version of Instagram for children under the age of 13. A coalition of 44 attorneys general contends that social media "can be detrimental to children for myriad reasons and that Facebook has historically failed to protect the welfare of children on its platforms," James said in a statement. "Without a doubt, this is a dangerous idea that risks the safety of our children and puts them directly in harm's way," said James. “Not only is social media an influential tool that can be detrimental to children who are not of appropriate age, but this plan could place children directly in the paths of predators. There are too many concerns to let Facebook move forward with this ill-conceived idea, which is why we are calling on the company to abandon its launch of Instagram Kids. We must continue to ensure the health and wellness of our next generation and beyond.” The letter cited the following five concerns specifically:
Research indicating that social media can be harmful to the well-being of children
Rapidly worsening accounts of cyberbullying on Instagram
Use of the platform by predators to target children
Facebook’s unstable record in protecting the welfare of children on its platforms; and
Children’s lack of capacity to navigate the complexities of what they encounter online
“As every parent knows, kids are already online,” Andy Stone, a Facebook spokesman, said in a statement. “We want to improve this situation by delivering experiences that give parents visibility and control over what their kids are doing.”
ANALYST NERVOUS ABOUT FACEBOOK: Citi analyst Jason Bazinet downgraded Facebook (FB) to Neutral from Buy with an unchanged price target of $320. During the last two quarters, internet advertising growth has been "quite robust" due to a better macro environment, robust e-commerce and higher retailer web traffic, Bazinet tells investors in a research note. "However, three things make us nervous," wrote the analyst. First, among the top 10 Internet ad firms, in absolute dollar terms, sell-side analysts expect two-times the annual growth from 2021 to 2025 versus 2018 to 2020. Second, many investors believe ad intensity per dollar of economic activity is rising, while Bazinet sees "little evidence of this." Third, even if the sell-side estimates are right, growth will likely decelerate after Q2 of 2021 due to tougher comps, says the analyst. "Historically, that usually isn't bullish for multiples," concludes Bazinet, who downgraded both Alphabet (GOOG) and Facebook. He's now not recommend any large cap ad centric internet stocks except Roku (ROKU).
YOUTUBE TRUMP'S LAST HOPE: Following Facebook and Twitter's (TWTR) permanent ban on Donald Trump's social media accounts, Alphabet's YouTube has provided limited details on Trump's suspension from the video-sharing service and is likely the best chance he has for returning to social media in the near future, Tripp Mickle of The Wall Street Journal reported. YouTube previously said in a statement in January that Trump’s channel, which has almost 3M subscribers, was suspended for violating the platform’s incitement-to-violence policy in the wake of the January 6 Capitol riot. Mickle noted that YouTube has a three-strikes policy that governs channel suspensions. A single strike, as it imposed on Trump’s channel, typically warrants a one-week suspension. There is no mention in YouTube’s community guidelines of an indefinite suspension. A YouTube spokesman said that the service prolonged the suspension because of the continuing risk of violence. YouTube CEO Susan Wojcicki said in March that a recent warning from Capitol Police about a potential attack showed that Trump’s channel still posed a risk of inciting violence. She said YouTube would lift the suspension when that risk of violence has decreased. “It’s hard for me to say when that’s going to be, but it’s pretty clear right now where we stand,” Wojcicki said during a virtual event hosted by the Atlantic Council, a think tank.