Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
FACEBOOK UPHOLDS TRUMP BAN: The Oversight Board of Facebook (FB) upheld the company's decision on January 7 to restrict then-President Donald Trump's access to posting content on his Facebook page and Instagram account. "However, it was not appropriate for Facebook to impose the indeterminate and standardless penalty of indefinite suspension. Facebook's normal penalties include removing the violating content, imposing a time-bound period of suspension, or permanently disabling the page and account," the board said in a statement. The board "insists that Facebook review this matter to determine and justify a proportionate response that is consistent with the rules that are applied to other users of its platform." Facebook must complete its review of this matter within six months of the date of this decision, it said. The board also made policy recommendations for Facebook to implement in developing "clear, necessary, and proportionate policies that promote public safety and respect freedom of expression." The board found that the two posts by Trump on January 6 "severely violated" Facebook's Community Standards and Instagram's Community Guidelines. "We love you. You're very special" in the first post and "great patriots" and "remember this day forever" in the second post violated Facebook's rules prohibiting praise or support of people engaged in violence, the board said.
Facebook said in a statement: "Today, the Oversight Board upheld Facebook's suspension of former US President Donald Trump's Facebook and Instagram accounts. As we stated in January, we believe our decision was necessary and right, and we're pleased the board has recognized that the unprecedented circumstances justified the exceptional measure we took. However, while the board has not required Facebook to immediately restore Mr. Trump's accounts, it has not specified the appropriate duration of the penalty. Instead, the board criticized the open-ended nature of the suspension, calling it an 'indeterminate and standardless penalty,' and insisted we review our response. We will now consider the board's decision and determine an action that is clear and proportionate. In the meantime, Mr. Trump's accounts remain suspended. The board also made a number of recommendations on how we should improve our policies. While these recommendations are not binding, we actively sought the board's views on our policies around political figures and will carefully review its recommendations. We thank the board for the care and attention it gave this case."
FACEBOOK TESTS NEIGHBORHOODS: Facebook said it is starting to test Facebook Neighborhoods, a single destination to "build and strengthen local communities on Facebook." Facebook Neighborhoods is a dedicated space within the Facebook app designed to help users connect with their neighbors, participate in their local community and discover new places nearby. "Facebook Neighborhoods is a section of the Facebook app dedicated to your neighborhood, with a Neighborhoods profile that's different from your main Facebook profile," the company said. "To join, you'll need to be 18 years or older and confirm your neighborhood. You can choose to join just your own neighborhood or, in addition, you also have the option to join your Nearby Neighborhoods to see neighbors and posts from your surrounding neighborhoods. When you create your Neighborhoods profile, you can choose to add interests, favorite places and a bio so people can get to know you within the Neighborhoods Directory. You can write a post to introduce yourself, participate in discussions on posts from fellow neighbors and answer Neighborhoods Questions in the dedicated feed. People can also take on roles within Neighborhoods, including socializers who spark friendly conversations." This feature is currently available in Canada, and will begin to roll out to select U.S. cities soon.
Twitter (TWTR) plans to acquire the subscription service Scroll, Mike Park, Twitter's vice president for product, said in a blog post announcing the deal. Park said: "People come to Twitter every day to discover and read about what's happening. Publishers, journalists, and writers drive this conversation, keeping the world informed and igniting discussions around the news, issues, and topics we collectively care about. If Twitter is where so much of this conversation lives, it should be easier and simpler to read the content that drives it." Park added: "We plan to include Scroll as part of an upcoming subscription offering we're currently exploring. As a Twitter subscriber, picture getting access to premium features where you can easily read articles from your favorite news outlet or a writer's newsletter from Revue, with a portion of your subscription going to the publishers and writers creating the content." Scroll is pausing new sign-ups ahead of the deal. The company said it will be working to include their product into Twitter's subscription plans and prepare to grow its publisher network. "We’ll keep supporting the existing community of customers and publishers on Scroll, and new publishers interested in joining Scroll can sign up on their website for the latest updates."
NOTABLE SHARE TRANSACTIONS: On Monday, Cathie Wood's ARK Investment disclosed the purchase of 934.5K shares of Twitter. This came after Paul Singer's Elliott Investment Management increased its stake Twitter following last week's post-earnings selloff, Scott Deveau of Bloomberg reported. Elliott, who disclosed a stake in Twitter last year, increased its stake in Twitter by more than $200M and continues to buy the stock, sources told Bloomberg. The fund told several Wall Street analysts since Twitter reported results on Friday that the selloff is overdone, the sources added. Also, In a regulatory filing, Facebook disclosed that its CFO David Wehner sold 16K shares of common stock on April 29 in a total transaction size of $5.28M, reducing his stake by about 41%.
OCULUS BUYS GAME DEVELOPER: Facebook's Oculus said that virtual reality game developer Downpour Interactive is joining Facebook. "As part of the Oculus Studios team, Downpour Interactive will expand upon its ethos of creating stand-out games that evoke the human spirit and give players a "downpour" of emotion," Oculus said in a blog post. "We're so happy to welcome them to the family." All Downpour employees will be moving to Facebook. Downpour developed multiplayer VR game "Onward." Oculus said it saw great success with "Onward" on the Oculus platform for several years. Becoming part of the Oculus Studios family will give Downpour Interactive the opportunity to cultivate both the Onward community with the full support of Oculus Studios resources, and, in the future, pursue other projects, the company said. As for future M&A for the virtual-realty headset company, Oculus noted that it is exploring a number of ways to accelerate virtual reality, including third-party content investments , AAA intellectual property, hardware and more. Notably, Facebook said on its Q4 earnings conference call last week that the next logical computing platform is virtual reality.
EARNINGS RECAP: This week saw most of the notable social media companies reporting quarterly earnings. Facebook, which reported last Wednesday, beat analyst expectations on both EPS and revenue. Facebook daily active users, or DAUs, were 1.88B on average for March, an increase of 8% year-over-year. Facebook monthly active users, or MAUs, were 2.85B as of March 31, an increase of 10% year-over-year. Family daily active people, or DAP, was 2.72B on average for March 2021, an increase of 15% year-over-year. Family monthly active people, or MAP, was 3.45B as of March 31, 2021, an increase of 15% year-over-year. In March, DAUs were 1.88B on average, up 8% year-over-year with MAUs of 2.85B as of March 31, up 10% year-over-year. Facebook raised 2021 total expenses view to $70B-$73B from $68B-$73B. The social media giant said on its Q1 conference call that it continues to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recently-launched iOS 14.5 update, which it expects to begin having an impact in Q2. Facebook noted that this is factored into its outlook. Facebook shares were up as much as 5% following the Q1 report. Consequently, many analysts updated their estimates and price targets in the aftermath. For example, Truist analyst Youssef Squali raised the firm's price target on Facebook to $400 from $350 and maintained a Buy rating on the shares. The company beat across virtually every key metric, while macro improvements around the economy re-opening and the sustained strength in commerce drove growth acceleration, the analyst told investors in a research note. Squali added that the higher operating expense guidance highlights Facebook's aggressive investments to pursue growth, particularly in areas including e-commerce and AR/VR.
On Thursday, Twitter reported its own Q1 earnings beat. Twitter reported Q1 average mDAU was 199M as compared to 166M last year. Average monetizable daily active users were 199M for Q1, compared to 166M in the same period of the previous year and compared to 192M in the previous quarter. Average U.S. mDAU were 38M for Q1, compared to 33M in the same period of the previous year and compared to 37 million in the previous quarter. Twitter then gave Q2 revenue guidance of $980M-$1.08B which came in below Street consensus. Shares fell 10% shortly after the results and guidance. Piper Sandler analyst Thomas Champion lowered the firm's price target on Twitter to $66 from $71 and reiterates a Neutral rating on the shares. Total daily active users in Q1 were 199M, missing Piper's estimate of 204M and the Street's 200M, Champion told investors in a research note. The analyst said the brand had a "slow start to the year" and he reduced estimates as Twitter continues to invest in the platform. He come away from the Q1 print "less enthused" than he did coming out of the February analyst day. On the other hand, JPMorgan analyst Doug Anmut, who lowered the firm's price target on Twitter to $80 from $91, recommended using the post-earnings selloff as a buying opportunity.
Ticker changed to META
-3.25 (-1.02%)
-0.82 (-1.51%)