Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
STEP BY STEP: In a regulatory filing on Tuesday, Twitter (TWTR) shared a letter sent to the stockholders of the company, in which it states in part: "Twitter's Board of Directors, after considering the factors more fully described in the enclosed proxy statement, unanimously determined that the merger agreement is advisable and the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Twitter and its stockholders; and adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement." Twitter's board of directors unanimously recommends that stockholders vote "for" the adoption of the merger agreement with Tesla's (TSLA) Elon Musk. "If the merger is completed, you will be entitled to receive $54.20 in cash, without interest and subject to any applicable withholding taxes, for each share of our common stock that you own (unless you have properly exercised your appraisal rights). This amount constitutes a premium of approximately 38% to the closing price of our common stock on April 1, 2022, which was the last full trading day before Mr. Musk disclosed his approximately nine percent stake in Twitter," the filing noted.
The filing came shortly after Musk told Bloomberg News Editor-in-Chief John Micklethwait at the Qatar Economic Forum in Doha that there are still some unresolved matters regarding his deal to buy the company, including information about spam accounts and finalizing the deal's financing. The proportion of fake, spam and bot accounts on the service is "still a very significant matter," Musk said, adding that "and of course there is the question of, will the debt portion of the round come together, and then will the shareholders vote in favor."
Some employees who attended a virtual town hall meeting for Twitter employees on Thursday said that Musk sounded genuinely enthusiastic about owning and running the company, but the meeting reinforced their mostly negative beliefs about him, Platformer's Casey Newton reported.
Musk told Twitter staff that the company should become more like WeChat and TikTok if it wants to hit his stated goal of amassing 1B users, The Verge's Alex Heath reported. In response to a question about how the social media company could expand its user base and boost engagement, Musk said that the app should offer more utility and ensure that "people are very entertained and informed," the author says, citing employees who heard the remarks during his first internal all-hands meeting. "There's no WeChat equivalent outside of China," Musk said. "You basically live on WeChat in China. If we can recreate that with Twitter, we'll be a great success."
SpaceX fired employees who helped write and distribute an open letter calling CEO Elon Musk's behavior "a frequent source of distraction and embarrassment," The New York Times' Ryan Mac reported. According to three people with knowledge of the situation, Gwynne Shotwell, SpaceX's president and COO, said in an email that the letter had made other employees "feel uncomfortable, intimidated and bullied." It is unclear how many employees were fired.
NEW FEATURES: Twitter wrote earlier on its platform that it is testing a way to write longer on Twitter. "A small group of writers are helping us test Notes. They can be read on and off Twitter, by people in most countries," said the company in a tweet.
Twitter and Shopify (SHOP) are partnering in a move that will see Twitter launching a sales channel app that will be made available to all of Shopify's U.S. merchants through its app store, TechCrunch's Sarah Perez reported. The news follows Twitter's recent launches of shopping-related features, including a "Product Drops" feature, as well as previous launches of mobile storefronts and livestream shopping. Merchants will now have the ability to utilize the new sales channel app to connect their Twitter account to their Shopify then get set up with Twitter’s Shopping Manager and other free tools Twitter built. This includes Twitter’s launch of a new feature called Location Spotlight, announced earlier this month, which enables local businesses in the U.S., Canada, U.K., and Australia to display information like their street address, contact info, and operating hours directly on their profile.
LONG-TERM FOCUS: Snap (SNAP) CEO Evan Spiegel, asked about the company's current share price in an interview by CNBC's Julia Boorstin from Cannes, France, said he is not concerned about volatility in the share price as the company remains focused on the long-term and its growth opportunities. Spiegel said the testing of Snapchat Plus, a new subscription service, is early, but he sees it as an "exciting opportunity." The Snap chief added that he sees 'ton of headroom' to grow considering size of audience.
YOU GET WHAT YOU PAY FOR: The Verge's Mitchell Clark and Alex Heath quoted Snap spokesperson Liz Markman as having said: "We're doing early internal testing of Snapchat Plus, a new subscription service for Snapchatters. We're excited about the potential to share exclusive, experimental, and pre-release features with our subscribers, and learn more about how we can best serve our community." According to app researcher Alessandro Paluzzi, Snap is also testing other features for Snapchat Plus, including the ability to pin one of your friends as your “#1 BFF", change the Snapchat icon, and see who rewatched your stories. Paluzzi noted that the price for Snapchat Plus is listed as EUR 4.59 per month and EUR 45.99 per year. Reportedly, those may just be placeholder prices and not the actual figures.
ZOOM ONE: Zoom Video (ZM) unveiled the latest evolution of its communications platform with the introduction of Zoom One, a new offering that brings together persistent chat, phone, meetings, whiteboard, and more into secure and scalable packages. Additionally, Zoom also launched an all new translated and multi-language captions feature.
SHARE SALE: In a regulatory filing, Twitter disclosed that its CFO Ned Segal sold 5K shares of common stock on June 14 in a total transaction size of $190,000.
ANALYST COMMENTARY: Guggenheim analyst Michael Morris lowered the firm's price target on Snap to $18 from $35 to account for management having previously updated its outlook on May 23 to reflect Q2 revenue and adjusted EBITDA growth likely "below the low end" of their prior guidance and his own review of third-party data covering visitation to the company's online ad portal that has shown a meaningful sequential decline into Q2. The analyst, who has reduced his Q2 advertising growth estimate to $1.08B, or 10% quarterly growth, also updated his longer-term revenue and cost estimates. Morris maintained a Buy rating on Snap shares.
UBS analyst Lloyd Walmsley lowered the firm's price target on Snap to $17 from $45 and reiterated a Buy rating on the shares as part of a broader research note on U.S. Online Advertising names. The analyst points to deteriorating ad checks seen as early as last month and further cites increasing macro risk and FX moves justifying his "significantly below consensus" estimates.
KeyBanc analyst Justin Patterson sees a 50% probability of Alphabet (GOOG) making concessions on AdTech to the EU, which could prompt similar actions by Meta Platforms (META). His view is Overweight-rated Trade Desk (TTD) is the biggest beneficiary of any change. Focusing strictly on Europe, Patterson estimates 2023 revenue and EBITDA accretion of 21% and 30%. For Alphabet and Meta, the analyst views any revenue loss as de minimis versus potential fines.