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ORACLE SPEAKS ON TIK TOK DEAL: Even after CNBC reported that the Chinese government was expected to approve the Walmart (WMT) and Oracle (ORCL) deal for 20% of TikTok Global, Oracle announced it a statement to reporters that Tik Tok would be completely divested from ByteDance. Russell Brandom of The Verge reported that the company's statement was a "significant break" from previous reports regarding the deal between the two companies.
ANALYSTS WEIGH IN: On Monday. William Blair analyst Jason Ader called the TikTok deal a "major coup" for Oracle. Ader cited potential to monetize the upside of its 12.5% stake after an eventual public offering and a "massive" new hosting customer for the company's cloud infrastructure service. On the other hand, Morgan Stanley analyst Keith Weiss said finding further synergies, aside from the win for cloud infrastructure, in the deal with Oracle's existing business units may prove difficult . Weiss noted investors likely need more details around the OCI segment to understand if this deal represents a true "thesis-changer" for Oracle and that the reported $60B valuation looks expensive, he told investors in a research note.
UPDATE ON CFIUS TALKS: CNN reported negotiators in the TikTok deal aim to finalize talks with the Committee on Foreign Investment in the U.S, which includes officials from the Treasury, Commerce and Homeland Security departments, on Friday. Sources said that some details that still need to be worked out included if Oracle can make changes to ByteDance code for TikTok security.
DOJ WANTS ONLINE PLATFORMS ACCOUNTABLE: The Department of Justice sent draft legislation to Congress to reform Section 230 of the Communications Decency Act. The draft legislative text implements reforms that the Department of Justice deemed necessary in its June Recommendations and follows a yearlong review of the statute. "For too long Section 230 has provided a shield for online platforms to operate with impunity," said Attorney General William P. Barr. "Ensuring that the internet is a safe, but also vibrant, open and competitive environment is vitally important to America. We therefore urge Congress to make these necessary reforms to Section 230 and begin to hold online platforms accountable both when they unlawfully censor speech and when they knowingly facilitate criminal activity online."
ANALYSTS BULLISH ON FACEBOOK: Jefferies analyst Brent Thill noted Facebook's (FB) risk/reward profile "remains compelling." Further, digital ad spend growth has improved each month since April, and September is tracking ahead of plan, adds the analyst. Thill says $12 in earnings per share at a 20 times multiple implies a $300-plus stock, or greater than 15% upside from current levels. In the same vein, Oppenheimer analyst Jason Helfstein raised the firm's price target on Facebook to $300 from $270 and maintained an Outperform rating on the shares. The analyst cited 3P data and proprietary checks indicating stronger than anticipated recovery in Facebook advertising, and his bullish view on Shops as a long-term catalyst. Additionally, Helfstein is very bullish on Facebook's Shops/e-commerce initiative, likely seeing a COVID-19 tailwind.
TWITTER'S Q3 EARNINGS REPORT 'LIKELY' A CATALYST: Pivotal Research analyst Michael Levine upgraded Twitter (TWTR) to Buy from Hold with a price target of $59.75, up from $36. The stock closed Tuesday up $2.83 to $42.73. The analyst likes the Olympics coming in 2021, direct response beginning to kick in, and Twitter's potential subscription business. The company's Q3 earnings report and forward commentary are likely to act as positive catalysts for the stock, Levine tells investors in a research note. In addition, investor sentiment is "by far the most negative in our coverage" and as a result, the "rubber band for stock out-performance the greatest," says the analyst. Levine believes the changes Twitter has made around the process of onboarding new users over the last few months has meaningfully improved.
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