Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
BIG TECH BILL: Apple (AAPL) has warned that Senate Judiciary Committee is set to debate a bill that will limit the power of large tech companies, which would weaken a privacy-protection tool that the company rolled out last year, Tim Higgins of The Wall Street Journal reports. Apple has said congressional efforts to prevent it from prohibiting "sideloading," the practice of downloading software onto phones outside of the App Store's security, would expose users to security threats because those apps would not be vetted. Apple reiterated those claim Tuesday, but also argued the legislation would benefit "those who have been irresponsible with users' data" and those who opposed the company's App Tracking Transparency program, according to a letter to committee leaders the Journal reviewed. The legislation is set to limit the power of Apple as well as Amazon (AMZN), Google (GOOG;GOOGL), and Meta Platforms (MVRS), according to the Journal.
TOP GUN: JPMorgan analyst Doug Anmuth lowered the firm's price target on Meta Platforms to $385 from $390 and maintained an Overweight rating on the shares. The company's revenue growth will decelerate in 2022 against tough compares, but Meta is making solid progress against Apple's iOS changes, Anmuth tells investors in a research note. Further, the analyst is encouraged that Reels can become a major advertising surface. He also believes the company has likely passed 10M active virtual reality units. The stock remains a top pick for Anmuth.
ANTITRUST LATEST: Competition legal expert Liza Gormsen, backed by litigation fund Innsworth, is preparing to mount a multibillion-dollar class action suit against Facebook (FB) and Meta for breaching the UK's competition law, Mike Butcher of TechCrunch reported. The suit is made on the basis that the company abused its dominance as a social networking platform by taking all the personal and private data of its users and, in return, its users could have free access to the platform. Gormsen's case rests on the argument that Facebook set an "unfair price" for UK Facebook users, TechCruch said. If successful, the action would have Facebook pay $3.1B in damages to Facebook users in the UK. The approach alleges Facebook should pay its 44M U.K. users compensation for the misuse of their data between 2015 and 2019. In a statement, Lovdahl Gormsen said: “In the 17 years since it was created, Facebook became the sole social network in the UK where you could be sure to connect with friends and family in one place. Yet, there was a dark side to Facebook; it abused its market dominance to impose unfair terms and conditions on ordinary Britons giving it the power to exploit their personal data. I’m launching this case to secure billions of pounds of damages for the 44 million Britons who had their data exploited by Facebook.”
SPACES: Twitter (TWTR) said that it is now allowing all Android and iOS users to record Twitter Spaces. "Hope you've gotten used to the sound of your own voice," the official Twitter Spaces account tweeted.
JANUARY 6 SUBPOENAS: Chairman Bennie Thompson announced that the Select Committee has issued subpoenas to four social media companies as a part of its investigation into the January 6 attack on the U.S. Capitol and its causes. After "inadequate" responses to prior requests for information, the Select Committee is demanding records from Alphabet, Meta, Reddit and Twitter relating to the spread of misinformation, efforts to overturn the 2020 election, domestic violent extremism, and foreign influence in the 2020 election. Chairman Thompson issued the following statement: "Two key questions for the Select Committee are how the spread of misinformation and violent extremism contributed to the violent attack on our democracy, and what steps-if any-social media companies took to prevent their platforms from being breeding grounds for radicalizing people to violence. It's disappointing that after months of engagement, we still do not have the documents and information necessary to answer those basic questions. The Select Committee is working to get answers for the American people and help ensure nothing like January 6th ever happens again. We cannot allow our important work to be delayed any further." The Fly notes that Reddit is working with Morgan Stanley (MS) and Goldman Sachs (GS) on an IPO, according to a Bloomberg report from last week.
MONETIZATION FEATURE: Instagram said in a blog post: "At Meta, we strongly believe in enabling creators to make a living through our platforms and have built a suite of tools to allow them to do that-helping them get support from their audience, partner with brands and earn money from advertising or bonuses directly from Instagram and Facebook. We're excited to introduce our newest monetization feature: Instagram Subscriptions. In 2020, Facebook launched Subscriptions, which has helped creators build sustainable businesses powered by the support of their communities. Based on strong creator feedback, we're ready to now bring this business model to creators on Instagram. With Instagram Subscriptions, creators can develop deeper connections with their most engaged followers and grow their recurring monthly income by giving subscribers access to exclusive content and benefits, all within the same platform where they interact with them already... Earlier this year, as part of our continued commitment to supporting creators, we shared that Meta would not collect any fees from creators on Facebook Subscriptions purchases until 2023 at the earliest, and this will also apply to Instagram Subscriptions. Additionally, we believe that creators should know their audience and have more control over their business. We hope to build the tools to allow them to also directly connect with their audience off platform in the future."
ANALYST COMMENTARY: Morgan Stanley analyst Brian Nowak raised the firm's price target on Meta Platforms (FB) to $395 from $365 and keeps an Overweight rating on the shares as he updated his models and rolled forward valuations among his Internet sector coverage. Heading into 2022, in addition to being positive on Meta, Nowak said he remains positive on Uber (UBER), Amazon (AMZN), Snap (SNAP), Roblox (RBLX), Compass (COMP) and Integral Ad Science (IAS). Concurrently, Nowak lowered the firm's price target on Snap (SNAP) to $60 from $65 and maintained an Overweight rating on the shares as he updated his models and rolled forward valuations among his Internet sector coverage.
Cowen analyst John Blackledge lowered the firm's price target on Twitter to $50 from $67 and keeps a Market Perform rating on the shares. The analyst surveyed 54 senior U.S. ad buyers in late 2021 and found that ad buyers view Twitter as being adversely affected by iOS 14.5 changes. In addition, the company's return on investment and measurement continues to lag other digital players, Blackledge tells investors in a research note. As such, the analyst lowered his estimates for Twitter. Additionally, Blackledge downgraded Snap (SNAP) to Market Perform from Outperform with a price target of $45, down from $75. The analyst has near-term concerns around Apple's iOS 14.5 changes impacting Snap's measurement, targeting and attribution for direct response ad units. Further, the company faces difficult compares in the first half of 2022 and the stock's valuation "remains elevated," Blackledge tells investors in a research note. The analyst cites near-term headwinds for the downgrade to Neutral.