Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news. GOOGLE+ BREACH ANNOUNCED, SERVICE SHUT DOWN: On October 8, Alphabet (GOOG, GOOGL) shuttered Google's social media offering Google+ for consumers, following a Wall Street Journal report of a data breach exposing the private data of hundreds of thousands of users. Later that afternoon, Google announced it shut down the network following an audit called "Project Strobe." Google's announcement said, "The consumer version of Google+ currently has low usage and engagement: 90% of Google+ user sessions are less than five seconds. Our review showed that our Google+ APIs, and the associated controls for consumers, are challenging to develop and maintain. Underlining this, as part of our Project Strobe audit, we discovered a bug in one of the Google+ People APIs: Users can grant access to their Profile data, and the public Profile information of their friends, to Google+ apps, via the API. The bug meant that apps also had access to Profile fields that were shared with the user, but not marked as public. This data is limited to static, optional Google+ Profile fields including name, email address, occupation, gender and age." Shares of Google parent Alphabet dipped 1.5% intraday to $1,148.19 following the news on Monday. Alphabet shares are finishing the week down about 5.3% at $1,100.18 per share, at time of writing. SNAP ORIGINALS ANNOUNCED, STOCK CONTINUES SLIDE: Snap (SNAP) announced "Snap Originals" on October 10, which provides Snapchat users with "exclusive shows created by some of the world's greatest storytellers, with new episodes released every day" on social network. Wall Street analysts, however, maintained their focus on the social app's declining Daily Active Users, or DAUs. MoffettNathanson analyst Michael Nathanson said he is skeptical the company can hit his stated 2019 goal of achieving full year positive free cash flow and profitability. Snap "is quickly running out of money," contended Nathanson, who thinks the company will need to raise capital by the middle to end of 2019. The analyst lowered his revenue estimates by 7% in 2019 and 15% in 2020 as he anticipates slower DAU and ARPU growth ahead and maintained his Neutral rating on Snap shares, though he cut his price target to $6.50 from $8. Goldman Sachs analyst Heath Terry lowered his price target for Snap to $11 from $17, but reiterated a Buy rating on the shares. With Snap shares down 50% since the company reported Q2 results, beyond the broader weakness in social media, the analyst believes investors are clearly focused on the impact competition is having on the company's user growth, ability to monetize, and capital needs. Pivotal Research provided a contrarian view, with analyst Brian Wieser upgrading the stock to a Buy from Hold and saying despite declining usage and liquidity, the data he looks at is showing a "widening user base, although one which is collectively reducing its time on the platform." Snap, despite a recovery of over 5% today, are down over 7.5% for the week at time of writing. FACEBOOK INTRODUCES PORTAL: On October 8, Facebook (FB) announced its entrance into the connected home market with Portal, a new video communications device utilizing artificial intelligence to enhance video calls and Facebook Messenger chats. The connected-home has a built-in Amazon Alexa (AMZN) virtual assistant and features augmented reality effects. On October 5, SunTrust analyst Youssel Squali said the latest data from AdExchanger suggested that over 10B messages have been exchanged between people and businesses every month, which is a 5-times increase in activity in less than two years. The analyst contended that the monetization of the Messenger platform is in its early days and represents a "massive opportunity" for Facebook. The launch of the Portal seems to move on that opportunity. INSTAGRAM ANNOUNCES NEW FEATURES: On October 4, Facebook subsidiary Instagram announced a new customizable Nametag to make it easier for users to follow each other. Users can scan each other's Nametags through the Instagram app, like a QR code. On October 9, Instagram announced new tools to deter and report bullying through the app. The social network said the new technology has already begun to roll out.
