Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
FACEBOOK ANNOUNCES BLOCKCHAIN CURRENCY: Facebook (FB) announced on its website on June 18, "Today we're sharing plans for Calibra, a newly formed Facebook subsidiary whose goal is to provide financial services that will let people access and participate in the Libra network. The first product Calibra will introduce is a digital wallet for Libra, a new global currency powered by blockchain technology. The wallet will be available in Messenger, WhatsApp and as a standalone app -- and we expect to launch in 2020... From the beginning, Calibra will let you send Libra to almost anyone with a smartphone, as easily and instantly as you might send a text message and at low to no cost. And, in time, we hope to offer additional services for people and businesses, like paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit without needing to carry cash or a metro pass... When it launches, Calibra will have strong protections in place to keep your money and your information safe. We'll be using all the same verification and anti-fraud processes that banks and credit cards use, and we'll have automated systems that will proactively monitor activity to detect and prevent fraudulent behavior. We'll also offer dedicated live support to help if you lose your phone or your password - and if someone fraudulently gains access to your account and you lose some Libra as a result, we'll offer you a refund."
Analysts were generally positive on the news, with SunTrust analyst Youssef Squali noting that unlike most cryptocurrencies, this one would be backed by real assets, and governed by credible industry players, "which should both limit the volatility of the currency and bring much needed credibility to this initiative," and Tigress Financial analyst Ivan Feinseth calling it a "game changer," allowing the company to be a "major participant" in the $1.4T e-commerce marketplace.
WEDBUSH ANALYST SAYS DOJ 'BARK WORSE THAN BITE': Wedbush analyst Daniel Ives wrote in a note on June 19 that the noise is getting louder around regulation and antitrust concerns with FAANG names such as Amazon (AMZN), Facebook, Google (GOOG), and Apple (AAPL), and while this is not a new issue per se, there is growing rhetoric around big tech's grip on e-commerce, digital advertising, the app ecosystem, social media, and search among other areas of the tech food chain. The analyst ultimately believes this is more noise versus the start of broader structural changes across the tech food chain and will likely result in business model tweaks and potential DOJ/FTC fines in a worst-case scenario rather than forced breakups of the underlying businesses. That said, Ives acknowledges that these potential DOJ probes could be an overhang on the stocks, but would encourage investors to focus on the fundamentals in the near-term as any probe would take many years to complete as witnessed first-hand with Microsoft (MSFT), which proved to be more noise than a structural jolt to its business model. Further, the analyst believes that Congress will investigate claims of anticompetitive behavior, but ultimately expects a "no harm, no foul" outcome on these FAANG names.
LOOP CALLS TWITTER PULLBACK A BUYING OPPORTUNITY: In a note from June 14, Loop Capital analyst Alan Gould kept his Buy rating and $55 price target on Twitter (TWTR), saying that Thursday's 3% pullback in its stock price following cautious commentary from another sell-side firm offers investors a "buying opportunity." The analyst noted that the company's user engagement story "continues to show solid improvement" with more conversion among users from "casual" to daily. Gould also believes that budget allocations by brand advertisers to Twitter will continue to increase as the industry chases the growth rate of its engagement. The analyst further believes that direct-response advertising will add "another pillar" to Twitter's monetization story.
SNAP PRICE TARGET RAISED AT BTIG: BTIG analyst Richard Greenfield raised his price target on Snap (SNAP) to $20 from $15 and kept his Buy rating on shares, saying his "conviction" in the company's recovery story has increased "meaningfully" and the morale of its staff has improved "notably". The analyst believes that the company's engagement metrics should be driven higher by third-party apps like Yolo as well as "increased filter excitement," improved Discovery section, the launch of gaming and the benefit gathered from the rebuild of the Android OS app.
Ticker changed to META
-2.71 (-1.44%)
Amazon.com
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Alphabet
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Apple
-0.38 (-0.19%)
-0.6 (-1.64%)
Snap
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