Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
MORE TROUBLES AT FACEBOOK: On March 13, Facebook (FB) suffered a global outage that affected the social network, its Facebook Messenger app, and Instagram. The company blamed the outage on "a server configuration change" and added "many people had trouble accessing our apps and services. We've now resolved the issues and our systems are recovering. We’re very sorry for the inconvenience and appreciate everyone’s patience."
In a note from Facebook founder Mark Zuckerberg after the market close on Thursday, March 14, he announced that Chief Product Officer Chris Cox had decided to leave the company. Additionally, Zuckerberg announced that VP of WhatsApp Chris Daniels had decided to leave the company.
Fifty people were killed on Friday, March 15, in terrorist shootings at two mosques in the city of Christchurch, New Zealand, and the shooter livestreamed a 17-minute video of the attack on Facebook. Following the incident, Senator Richard Blumenthal called for Congress to investigate Facebook, saying "Facebook & other platforms should be held accountable for not stopping horror, terror, & hatred – at an immediate Congressional hearing."
In a research note to investors, Needham's Martin downgraded Facebook to Hold from Buy as she worries about the negative financial impact of the company's strategic pivot toward privacy and encrypted messages, growing risks of regulations, and horrific images uploaded to Facebook like those related to the recent New Zealand events that are technologically difficult to block at the 100% level and which hurt the brand. Further, the analyst said that she is concerned that regulatory, headline, and strategic pivot risks will negatively impact Facebook's valuation more than investors currently believe due to the negative flywheel created by network effects, as evidenced by the exit of many important executives.
SPOTIFY/APPLE SPAT GOOD FOR INSTAGRAM?: Daniel Ek, the CEO of music streaming service Spotify (SPOT), said his firm's relationship with Apple (AAPL) is "completely unsustainable," according to a report. The statement came a day after Spotify initiated a complaint with the European Commission against Apple. Ek maintained that Apple's imposition of a 30% tax on App Store purchases would force Spotify to artificially inflate the price of its Premium membership well above the price of Apple Music, giving Apple unfair leverage. Apple countered Spotify's allegations with a statement of its own, saying Spotify "wants all the benefits of a free app without being free."
Note that Instagram features Spotify integration, and social media users can "share Spotify albums, tracks, artists, and playlists directly to Instagram Stories, complete with deeplinks that'll drive followers back into the Spotify app to listen to music."
SNAPCHAT LAUNCHING GAMING PLATFORM: Snap (SNAP) plans to announce a gaming platform for developers next month, according to a report. The mobile game platform will feature games from outside developers designed to work specifically in the Snapchat app, according to a person familiar with the matter. The new gaming platform will be unveiled at Snap's first-ever summit for content and developer partners in Los Angeles on April 4.
Ticker changed to META
+3.63 (+2.25%)
Spotify
+2.565 (+1.81%)
Apple
+1.56 (+0.84%)
Snap
+0.3 (+2.82%)