Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
ANTITRUST LATEST: Germany's independent competition authority the Bundeskartellamt, "whose task is to protect competition in Germany," said in a statement on Wednesday: "Users who want to use the Quest 2 VR headset offered by Meta Quest (META), formerly Oculus, no longer need a Facebook account to do so. Meta has responded to the Bundeskartellamt's competition concerns and now also offers the possibility to set up the headset using a separate account, the Meta account. The sale of the headsets in Germany can thus go ahead. This also applies to the new Quest Pro headset." Andreas Mundt, President of the Bundeskartellamt, stated: "The digital ecosystem created by Meta with a very large user base makes the company the key player in social media. Meta is also an important player in the growing VR market. Competition in these two sectors could be severely impeded if only Facebook or Instagram members were able to use the VR headsets. Meta has responded to our concerns and has offered to give users of Quest glasses the option to create a separate Meta account as a solution to the problem. While we welcome this development, we will not terminate the proceeding today. We will now continue to monitor the actual design of users' options as well as issues regarding the combination and processing of user data from the various Meta services."
DANGEROUS DATA: In a post to his Twitter account, Brendan Carr, who serves as a commissioner of the Federal Communications Commission, said: "The President of the European Commission, Ursula von der Leyen, confirms that #TikTok's data transfers are under investigation & object of several ongoing proceedings. This comes after concerns raised by Members of the European Parliament about data access from inside China."
Tax filing services including H&R Block (HRB), Blucora's (BCOR) TaxAct, and TaxSlayer have been sending users' sensitive financial information to Facebook (META) when Americans file their taxes online, The Markup's Simon Fondrie-Teitler, Angie Walker, and Colin Lecher reports. The information sent to Facebook can be used by the company to power its advertising algorithms and is gathered regardless of whether the person using the tax filing service has an account on Facebook or other platforms operated by parent Meta, according to the report. The data includes names and email addresses, but also data on users' income, filing status, refund amounts, and dependents' college scholarship amounts.
WHAT THE ZUCK?: Andy Stone, Meta's communications director, said on Twitter that a report claiming CEO Mark Zuckerberg is set to resign next year is false.
EARNINGS RECAP: Zoom Video (ZM) fell 7% on Monday despite meeting or exceeding analyst expectations for revenue and EPS in its third quarter results. While the company did provide lower than anticipated Q4 guidance, it also raised it's FY23 outlook for EPS and axed its FY23 revenue view. Zoom Video said in prepared remarks for its Q3 earnings call that its annual seasonality of renewals is front-end loaded and moderates over the rest of the year, reflecting the sequentially smaller renewal base. As a result, the company expects Q4 deferred revenue to grow roughly 2%-3% year-over-year. "At Zoomtopia, we announced a number of innovations including Zoom Mail and Zoom Calendar, along with new partnerships that are expected to power and enhance the modern work experience," said Eric Yuan, Zoom founder, and CEO. "Our customers are increasingly looking to Zoom to help them enable flexible work environments and empower authentic connections and collaboration. Proactively addressing these needs with Zoom's expanding platform continues to be our focus in this dynamic environment. In Q3, we drove revenue above guidance with continued momentum in Enterprise. In addition, our non-GAAP operating income came in meaningfully higher than our outlook, setting us up to finish the year with full-year revenue growth, strong GAAP and non-GAAP profitability, and free cash flow that we expect to be at the high end of our range of $1 billion to $1.15 billion."
RETURN OF TRUMP: Twitter (TWTR) reinstated former President Donald Trump's account, after Elon Musk ran a Twitter poll where 51.8% of 15M+ users voted yes on reinstatement, Reuters' Sheila Dang and Helen Coster reported. "The people have spoken. Trump will be reinstated," Musk said. Trump's Twitter account had over 88 million followers before he was banned on January 8, 2021. Trump said he would stick with Truth Social, the app developed by his Trump Media & Technology Group startup (DWAC).
USING USERS: Facebook parent Meta Platforms has fired or disciplined more than two dozen employees and contractors over the last year whom it accused of improperly taking over user accounts, The Wall Street Journal's Kirsten Grind and Robert McMillan reported. Some of those fired were contractors who worked as security guards stationed at Meta facilities and were given access to the internal mechanism for employees to help users having trouble with their accounts, according to documents and people familiar with the matter. Meta said that in some cases workers accepted thousands of dollars in bribes from outside hackers to access user accounts, the people and documents say, adding that the disciplinary actions are part of a lengthy internal probe led by Meta executives.
SHARE SALE: In a regulatory filing, Snap (SNAP) disclosed that its COO Jerry Hunter sold 106.8K shares of common stock on November 14th in a total transaction size of $1.2M.
BREAKING POINT: Multiple employees at Twitter have told The Verge's Alex Heath that the odds of Twitter "breaking" in the near future are "very high."
TRACKING MUSKS TWEETS: Twitter CEO Elon Musk has taken to Twitter often to provide background to news and events happening within his new company. Some tweets from this week are as follows:
ANALYST COMMENTARY: Morgan Stanley analyst Adam Jonas noted that Tesla (TSLA) has shed about $0.5T in market cap in two months and is approaching his $150 "bear case" target, driven by price cuts in China, decelerating EV demand, and "other market currents" that include Elon Musk's purchase of Twitter (TWTR) and possibly fallout from crypto markets. In that context, he questions is "a value opportunity emerging?" Tesla is "the only self-funding pure play EV" maker he covers and "the only name we cover that generates a profit (before incentives) on the sale of EVs," said Jonas, who adds that the current price "offers approximately 100% potential upside to our $330 price target, which is the highest upside to target we have seen from Tesla in over 5 years." Jonas maintains an Overweight rating on Tesla shares.
Benchmark analyst Matthew Harrigan lowered the firm's price target on Zoom Video to $102 from $118 and maintained a Buy rating on the shares. His target change is prompted by the company's below-consensus fiscal Q4 sales guidance and "management's intimations for modest F2024 growth," said Harrigan, who admits to having "emerged as a 'defender of the faith" on Zoom's long-term UCaaS growth potential."
Evercore ISI analyst Peter Levine lowered the firm's price target on Zoom to $85 from $95 and reiterated an In Line rating on the shares. Results came in line with expectations given sentiment heading into the quarter was low, said Levine, who sees no near-term catalyst to potentially re-rate the shares.
Wells Fargo analyst Michael Turrin lowered the firm's price target on Zoom to $80 from $95 and kept an Equal Weight rating on the shares. The analyst notes the company's Q3 print was relatively in line, but lacking in evidence on Zoom's ability to drive either a rebound in growth rates or notable margin expansion. He expects Zoom Video's shares will remain range-bound as a result.
Baird analyst Rob Oliver raised the firm's price target on Sprout Social (SPT) to $76 from $64 and reaffirmed an Outperform rating on the shares. The analyst met with management and came away with increased comfort in the company's strategy and competitive position and a better understanding of the new pricing announced on last call.