Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
FACEBOOK'S NY TIMES TROUBLE: On Wednesday, the New York Times reported Facebook (FB) CEO Mark Zuckerberg and COO Sheryl Sandberg allegedly ignored warning signs that the company's power could be used to disrupt elections and broadcast viral propaganda and then sought to conceal them from the public eye. The report cited current and former executives who said that at critical moments over the past three years, the two executives were distracted by personal projects and passed off security and policy decisions to subordinates.
Facebook replied to the New York Times article on Thursday and claimed the story contained a number of inaccuracies. Later that day, the Facebook board issued a statement to media outlets, "As Mark [Zuckerberg] and Sheryl [Sandberg] made clear to Congress, the company was too slow to spot Russian interference, and too slow to take action. As a board we did indeed push them to move faster. But to suggest that they knew about Russian interference and either tried to ignore it or prevent investigations into what had happened is grossly unfair. In the last eighteen months Facebook, with the full support of this board, has invested heavily in more people and better technology to prevent misuse of its services, including during elections. As the US mid-term showed they have made considerable progress and we support their continued to efforts to fight abuse and improve security." Last night, Sandberg responded as well, stating that the allegations that she and Zuckerberg hid information about Russian interference are untrue.
This morning, Stifel analyst Scott Devitt said the probability of change at the top of Facebook is low, given that Mark Zuckerberg controls the majority of Facebook voting power, but Devitt believes the "campaign trail to rebuild credibility will be long and difficult" following the recent critical articles in The New York Times and Wall Street Journal. Facebook's board and management could accelerate the credibility rebuild by considering making a or changes at the top, which Devitt thinks would be viewed positively "by the vast majority of constituents." The analyst maintains a Buy rating on Facebook shares.
SNAP SUBPOENAED BY SEC: Reuters reported on Wednesday, citing a statement by the company, that the U.S. Justice Department and the Securities and Exchange Commission have subpoenaed Snap (SNAP) for information regarding its March 2017 initial public offering. The company said, "While we do not have complete visibility into these investigations, our understanding is that the DOJ is likely focused on IPO disclosures relating to competition from Instagram."
INSTAGRAM LAUNCHES NEW SHOPPING FEATURES: Marketing Land published a blog yesterday that highlights three new ways to shop with Instagram. The photo sharing app added a new shopping collection feature where users can save products. Users can also shop through videos because the app added a shopping icon at the bottom-left corner of branded videos. Users that have a business profile can now add a shop tab that links to a feed of product images. The blog concludes by noting that the timing of the launch of these new features matter as we're approaching the busiest shopping week of the holiday season.
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Snap
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