Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
BIG TECH CRACKDOWN CONTINUES: House lawmakers are preparing to propose bipartisan legislation, which could be announced as early as Friday, that may require Amazon (AMZN) and other technology giants like Facebook (FB) to effectively split into two companies or shed their private-label products, according to The Wall Street Journal's Dana Mattioli and Ryan Tracy. Another bill that also could be announced Friday targets the ability of big tech companies to leverage their online platforms to favor their own products over competitors and is among five bills under consideration that aim to curb the dominance of Amazon as well as other tech giants including Apple, Facebook (FB) and Alphabet's (GOOGL) Google, the report said. While the legislation could face some hurdles, if it becomes law the effects would reportedly reshape the industry. One of the proposed measures, titled the Ending Platform Monopolies Act, seeks to make it unlawful for a covered online platform to own a business that “utilizes the covered platform for the sale or provision of products or services” or that sells services as a condition for access to the platform. The platform company also couldn’t own businesses that create conflicts of interest, such as by creating the “incentive and ability” for the platform to advantage its own products over competitors. A separate bill targets platforms’ self-preferencing. It would bar platforms from conduct that “advantages the covered platform operator’s own products, services, or lines of business over those of another business user,” or that excludes or disadvantages other businesses. Mattioli and Tracy noted that the proposed legislation would need to be passed by the Democratic-controlled House as well as the Senate, where it would likely also need Republican support. However, the bills do have members from both parties signed on. “Unregulated tech monopolies have too much power over our economy,” Representative David Cicilline, the top Democrat on the House Antitrust Subcommittee told WSJ. “They are in a unique position to pick winners and losers, destroy small businesses, raise prices on consumers, and put folks out of work. Our agenda will level the playing field.” Representative Ken Buck, the panel’s top Republican, said he supports the bill because it “breaks up Big Tech’s monopoly power to control what Americans see and say online, and fosters an online market that encourages innovation.” Smaller companies like Spotify (SPOT) and Roku (ROKU) have applauded the bipartisan efforts. In a statement to CNBC Roku said, "Roku applauds Reps. David Cicilline and Ken Buck for taking a crucial step toward curbing the predatory and anticompetitive behaviors of some of the country’s most powerful companies. Roku has firsthand experience competing against and interacting with these monopolists, and we’ve seen how they flagrantly ignore antitrust laws and harm consumers by leveraging their dominance in one line of business to stifle competition in another. An aggressive set of reforms is needed to prevent a future where these monopolists further abuse consumer choice and hamper access to innovative and independent products."
FACEBOOK TEASES AUDIO PRODUCTS AND GAMING GROUPS: Facebook has plans to start rolling out its podcast product on June 22 and eventually adding a feature that will allow listeners to create clips from their favorite shows, Ashley Carman of The Verge reported, citing an email sent to podcast page owners. "Facebook will be the place where people can enjoy, discuss, and share the podcasts they love with each other," the company says in the email. Podcasters who publish on the platform will also be opting into Facebook's podcast terms of service, Carman noted. This news follows the report from TechCrunch's Sarah Perez noting that Facebook's Clubhouse clone, Live Audio Rooms, hosted its first public test in the U.S. Along with CEO Mark Zuckerberg, on the beta yesterday were VP and head of Facebook reality labs Andrew Bosworth, head of Facebook App Fidji Simo and three Facebook Gaming creators, including StoneMountain64, QueenEliminator, and TheFierceDivaQueen, Perez noted. The creators utilized the Audio Room to speak on their gaming journeys on Facebook and other gaming-related matters. Zuckerberg teased new gaming features, such as a new type of post, coming soon, called “Looking for Players.” This post type will reportedly help creators find others in the community to play games with while they’re streaming. Additionally, streamers are now able to use new features in Fan Groups, like the functionality to organize topics into threaded discussions, Engadget reported.
FACEBOOK EXPANDING REMOTE WORK POLICY: Facebook CEO Mark Zuckerberg plans to work remotely for half of the next year, telling staff in a memo this week that working from home makes him "happier and more productive," The Wall Street Journal's Chip Cutter reported. As for its its roughly 60,000 employees, Facebook will expand remote-work eligibility to all levels of the company, including early-career employees and entry-level engineers. The company is aiming to open most of its U.S. offices at half capacity in September, and then fully in October. However, once that occurs, employees will need to seek approval to stay remote and otherwise will be expected to come into the office, at minimum, 50% of the time, according to the internal announcement. Zuckerberg said the adjustment to embrace both in-office and remote work could take a while. “Getting this right will take years,” he said. The social media giant plans to continuously survey employees to gauge the new policy's effectiveness.
ANALYSTS EYE ZOOM POST PANDEMIC: Argus analyst Joseph Bonner upgraded Zoom Video (ZM) to Buy from Hold with a $440 price target. The analyst noted that the company continues to benefit from the "extraordinary growth in its installed base" that came with last year's pandemic lockdowns, though he questions whether the pandemic has created a "secular change" in remote work leading to a "hybrid" home-office model. Bonner added that while Zoom faces competition from several large incumbents, he is also raising his FY22 EPS view to $4.62 from $3.81 and FY23 to $4.97 from $4.36. RBC Capital analyst Rishi Jaluria assumed coverage of Zoom Video with an Outperform rating and a price target of $450, down from $480. Jaluria named Zoom his top pick, though he added that while the company undoubtedly had stellar performance in 2020, there is a question around how it will perform in a post-pandemic world. The analyst added that he remains bullish because Zoom will remain important and relevant in a post-pandemic world, because it has differentiated technology, and because it has an attractive long-term financial profile.
ELLIOT DIRECTOR REPLACED AT TWITTER: Twitter (TWTR) announced the appointment of Mimi Alemayehou to the company's board of directors as a new independent director, effective immediately. In connection with Alemayehou's appointment, Jesse Cohn will be stepping down after what the company called an important year on the board. Cohn was appointed to the Twitter board in March 2020, as part of a deal that enabled CEO Jack Dorsey keep his title. Despite Cohn's departure, Elliott Investment said it will continue to engage with members of the company's senior management team and board, facilitated by the information sharing and engagement agreement the company previously entered into with Elliott.
-0.16 (-0.27%)
Zoom Video
+3.53 (+0.98%)
Roku
-3.83 (-1.13%)
Spotify
+0.15 (+0.06%)
Alphabet
-6.97 (-0.29%)
Alphabet
-2.15 (-0.09%)
Ticker changed to META
-4.55 (-1.35%)
Amazon.com
+37.72 (+1.12%)