Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
FACEBOOK REMOVES "MISLEADING" NETWORKS OF ACCOUNTS: On May 5, Facebook (FB) said in a blog post that it removed eight networks of accounts, Pages and Groups in April. Two of them - from Russia and Iran - focused internationally, and the remaining six - in the US, Georgia, Myanmar and Mauritania - targeted domestic audiences in their respective countries. "We know that people looking to mislead others - whether through phishing, scams, or influence operations - try to leverage crises to advance their goals, and the coronavirus pandemic is no different," the company said. "All of the networks we took down for CIB in April were created before the COVID-19 pandemic began, however, we've seen people behind these campaigns opportunistically use coronavirus-related posts among many other topics to build an audience and drive people to their Pages or off-platform sites. The majority of the networks we took down this month were still trying to grow their audience or had a large portion of engagement on their Pages generated by their own accounts." In Russia, the company removed 46 Pages, 91 Facebook accounts, 2 Groups, and 1 Instagram account. In Iran, it removed 118 Pages, 389 Facebook accounts, 27 Groups, and 6 Instagram accounts. In the U.S., it removed 5 Pages, 20 Facebook accounts, and 6 Groups that originated in the US and focused domestically. The company noted that its investigation on the Iran pages linked this activity to the Islamic Republic of Iran Broadcasting Corporation.
TWITTER REPORTS Q1 RESULTS: On April 30, Twitter (TWTR) reported financial results for its first fiscal quarter. The company reported Q1 earnings per share of 11c and Q1 revenue of $808M, against analyst expectations of 10c and $775.96M, respectively. Twitter also reported Q1 advertising revenue was up approximately $3M year-over-year, to $682M. Additionally, total ad engagements increased 25% year-over-year. Twitter also reported Q1 average monetizable daily active users were 166M, compared to 134M in the same period of the previous year and compared to 152M in the previous quarter. Twitter also announced it would not provide quarterly revenue and operating income guidance for Q2. Twitter said: "Given the unprecedented uncertainty and rapidly shifting market conditions of the current business environment, we are not providing quarterly revenue or operating income guidance for Q2." Although it is not updating previously withdrawn full-year outlook for expense and headcount growth, capital expenditures, or stock-based compensation at this time, Twitter noted: "While we remain committed to building out a new data center, recent developments may impact capex spend in full-year 2020. Current IT supply chain constraints are likely to affect timing of the buildout and elevated near-term capacity needs are driving increased spend on our existing infrastructure...Stock-based compensation expense is closely tied to headcount, timing of grants, and vesting. We have diminished visibility for full-year 2020 expenses with reductions in our hiring ramp underway, but we do expect SBC to grow sequentially in Q2 by 25% or more."
Following Twitter’s Q1 financial results, Pivotal Research analyst Michael Levine downgraded Twitter to Hold from Buy with a price target of $32, down from $32.25. The analyst noted that while the company's Q1 revenue and new users grew faster than expected, investors were "disappointed" by little detail on Q2-to-date revenue run rates. Levine added that with more people using Twitter as a news source, the new users will remain on the platform on the other side of the crisis, though he also believes that the record growth and acceleration in user growth driven by shelter-in-place orders is unlikely to repeat.
PINTEREST REPORTS Q1 RESULTS: On May 5, Pinterest (PINS) reported financial results for its first fiscal quarter. The company reported Q1 earnings per share of (25c) and Q1 revenue of $271.94M, against analyst expectations of (9c) and $270.08M, respectively. Pinterest reported Q1 Global Monthly Active Users grew 26% year-over-year to 367M. Pinterest also announced it would not provide FY20 revenue and adjusted EBITDA guidance. "Given the uncertainties related to the ongoing COVID-19 pandemic and the rapidly shifting macroeconomic conditions, we are not providing guidance expectations for revenue or Adjusted EBITDA for 2020,” Pinterest said.
On May 6, DA Davidson analyst Tom Forte downgraded Pinterest to Neutral from Buy with a price target of $19, down from $21. The analyst noted that the outbreak of COVID-19 is having a greater negative impact on the company's monetization than he had initially forecast. Forte added that while Pinterst is moving forward with its plans to invest in the business, the incremental spending combined with sales pressure will result in greater adjusted EBITDA losses than he initially projected.
SNAP DOWNGRADED TO SELL FROM NEUTRAL AT CITI: On May 6, Citi analyst Jason Bazinet downgraded Snap to Sell from Neutral with a price target of $14, up from $10. Investor expectations for 2020 and 2021 revenues are too high, Bazinet told investors in a research note. And if that proves true, Snap is trading near the peak of its historical valuation, added the analyst. He believes investors are now too bullish on both the company's daily active user growth and monetization trends. While Snap initially benefited from stay at home orders with increased user engagement, third-party data suggests momentum may not be sustainable, Bazinet contended.
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