Biden eyes DOJ antitrust division head, Zoom to acquire Five9 in all-stock deal, 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.
BIDEN VS. FACEBOOK: Officials meeting with Facebook (FB) on behalf of President Joe Biden regarding vaccine misinformation concluded Facebook is either not "taking their concerns seriously, or is hiding something," sources told CNN, Kaitlan Collins and Donie O'Sullivan reported. A Facebook spokesperson did not directly respond to the source's characterization of the company's efforts but told CNN that Facebook is working to tackle Covid-19 misinformation and has launched initiatives like a vaccine appointment tool. At a White House press briefing on Thursday, Biden's press secretary Jen Psaki said, "Facebook needs to move more quickly to remove violative posts. Posts that will be within their policies' removal often remain up for days. That's too long. The information spreads too quickly." On Friday President Biden went as far as to say Facebook's vaccine misinformation was "killing people." While the President has since walked back those specific comments, he has repeatedly pushed the social media giant to do more “instead of taking it personally that somehow I’m saying Facebook is killing people.” Facebook took to a blog post to respond: "At a time when COVID-19 cases are rising in America, the Biden administration has chosen to blame a handful of American social media companies. While social media plays an important role in society, it is clear that we need a whole of society approach to end this pandemic. And facts — not allegations — should help inform that effort. The fact is that vaccine acceptance among Facebook users in the US has increased. These and other facts tell a very different story to the one promoted by the administration in recent days. Since April 2020, we’ve been collaborating with Carnegie Mellon University and University of Maryland on a global survey to gather insights about COVID-19 symptoms, testing, vaccination rates and more. This is the largest survey of its kind, with over 70 million total responses, and more than 170,000 responses daily across more than 200 countries and territories. For people in the US on Facebook, vaccine hesitancy has declined by 50%; and they are becoming more accepting of vaccines every day... The Biden Administration is calling for a whole of society approach to this challenge. We agree. As a company, we have devoted unprecedented resources to the fight against the pandemic, pointing people to reliable information and helping them find and schedule vaccinations. And we will continue to do so."
ANTITRUST LATEST: President Joe Biden appears to be leaning towards nominating Jonathan Kanter to lead the Justice Department's antitrust division, according to Bloomberg's Justin Sink and David McLaughlin. Kanter, who started his own firm recently, has been "a long-time foe of Google (GOOG, GOOGL) and is well known as an antitrust lawyer, added the story. Kanter is "closely aligned" with FTC Chair Lina Khan and Tim Wu, "who was appointed as a White House adviser on technology and competition policy," added the Bloomberg story. Other companies that may be impacted by this include: Facebook, Amazon (AMZN) and Apple (AAPL).
STREAMING ON SNAP: Snapchatters in the U.S. can watch select episodes of HBO Max programming virtually alongside their friends for free through Snap (SNAP) Minis, Snap's platform for shared experiences on Snapchat. HBO Max, part of AT&T's (T) WarnerMedia unit, is the first major streamer to build a Mini to bring full-length episodes to Snapchat. The HBO Max Mini launches instantly in Snapchat with no installation required and is available on iOS and Android. Snapchatters will be able to access watch groups that are viewing episodes. Through Snapchat's HBO Max Snap Mini, Snapchatters can watch a selection of content from the HBO Max catalog through shared playback, while chatting and sharing Bitmoji reactions. This partnership provides an additional avenue for people to congregate around and forge meaningful relationships with culture-defining shows," said Warner Media in a statement. “We’re excited to partner with HBO Max to offer our community an innovative co-viewing experience inside of Snapchat,” said Alston Cheek, director of platform partnerships at Snap. “Snap Minis offer an exciting new way for HBO Max to create social experiences for fans of its programming, complementing our incredible Snap Originals and partnered content available on Discover. The Mini is easy to use, and instantly brings friends together to watch their favorite titles and discover new shows for free.”
ZOOM-FIVE9 DEAL: Zoom Video (ZM) announced it has entered into a definitive agreement to acquire Five9 (FIVN) in an all-stock transaction valued at $14.7B. As part of the agreement, Five9 stockholders will receive 0.5533 shares of class A common stock of Zoom Video for each share of Five9. Based on the closing share price of Zoom class A common stock as of July 16, this represents a per share price for Five9 common stock of $200.28. The boards of Zoom and Five9 have approved the transaction. "Combining Five9's Contact Center as a Service solution with Zoom's broad communications platform will transform how businesses connect with their customers, building the customer engagement platform of the future," the company said in a statement. The acquisition "is expected to help enhance Zoom's presence with enterprise customers and allow it to accelerate its long-term growth opportunity by adding the $24 billion contact center market," it added. Following the close of the transaction, Five9 will be an operating unit of Zoom and Rowan Trollope will become a President of Zoom and continue as CEO of Five9. Mizuho analyst Siti Panigrahi views the company's acquisition announcement as a "sensible strategic action." The deal "preserves Zoom's Tier 1 brand while moving into the natural contact-center adjacency" and growing its total addressable market by $24B, Panigrahi told investors in a research note. The analyst applauds the deal and believes investors will receive it positively. Panigrahi keeps a Buy rating on Zoom with a $400 price target. Although, analysts like Baird's William Power callied the deal a "good strategic fit" and Morgan Stanley analyst Meta Marshall said the buyout "answers a lot of questions," not all firms responded to the news positively. Needham analyst Scott Berg downgraded Five9 (FIVN) to Hold from Buy. The analyst is positive on the company's sale to Zoom Video though he is "questioning" the timing after its "most impressive" reported quarter yet and its "massive" sales opportunity. Berg adds that the premium of about 13% over Friday's close "seems lackluster," even though he expects the acquisition to enhance Zoom's ability to sell its Zoom Phone up market to large enterprise customers by leveraging the strong Five9 install base and brand.
APPLE DEALS ROI BLOW TO FACEBOOK: After conducting a proprietary digital advertising survey, Wedbush analyst Ygal Arounian came away expecting continued strength in digital ad spend in Q2 and the coming quarters, benefiting from reopening. According to the survey, the pandemic has driven an increase in spending in digital advertising, with 57% of respondents increasing spend over the last six months and another 75% planning to increase in the next six months. The analyst also noted that with the changes coming from Apple's ATT update, advertisers are being forced to diversify their spend to more platforms and Facebook looks to be the most impacted. The advertisers he surveyed are already seeing an impact on ROI from Apple's privacy efforts. Additionally, Arounian says that despite the challenges from Apple's changes, Google and Facebook remain dominant and are regularly the preferred platforms for advertisers.
FACEBOOK UNCOVERS IRANIAN CYBER SPY ACCOUNTS: Facebook disclosed on Thursday that it cut about 200 accounts in Iran. The accounts terminated were a part of a cyber-spying effort focused on U .S. military and defense industry personnel, wrote Elizabeth Culliford for Reuters. Facebook said the hacker group called Tortoiseshell by security experts, "used fake online personas to connect with targets, build trust sometimes over the course of several months and drive them onto other sites where they were tricked into clicking malicious links that would infect their devices with spying malware," added the Reuters story. "This activity had the hallmarks of a well-resourced and persistent operation, while relying on relatively strong operational security measures to hide who's behind it," Facebook's investigations team said in a blog post. Facebook said the group used email, messaging and collaboration services to distribute the malware, including Microsoft (MSFT) Excel spreadsheets. A Microsoft spokesperson said in a statement it was aware of and tracking this actor and that it takes action when it detects malicious activity.
Keywords: President Joe Biden, COVID-19, vaccine, misinformation, DOJ, antitrust division, head, HBO Max, acquisition, digital ad spend, ROI impact, cyber spying