Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
ANTITRUST LATEST: The Federal Trade Commission has filed an amended antitrust complaint against Facebook in the U.S. District Court for the District of Columbia and requested that the Clerk of the Court file the FTC's unredacted First Amended Complaint under seal for ten calendar days from the date of this Court's order on its related motion. "The FTC has both good cause and a compelling reason to file an unredacted version of its First Amended Complaint temporarily under seal. Before bringing this action, the FTC conducted a non-public investigation into the anticompetitive conduct through which Facebook maintained its monopoly power in the market for personal social networking services in the United States. The FTC's First Amended Complaint includes certain information related to this conduct that Facebook, Inc. and/or third parties designated as 'confidential' during the course of the investigation. Before the FTC publicly discloses such information in a law enforcement proceeding, the FTC must afford the providing parties an 'opportunity to seek an appropriate protective or in camera order.' In addition, the FTC's First Amended Complaint references statistics calculated based on data obtained from third parties that is not publicly available and may be commercially sensitive," the complaint and a related order filed with court stated. "The complaint alleges that after repeated failed attempts to develop innovative mobile features for its network, Facebook instead resorted to an illegal buy-or-bury scheme to maintain its dominance. It unlawfully acquired innovative competitors with popular mobile features that succeeded where Facebook's own offerings fell flat or fell apart. And to further moat its monopoly, Facebook lured app developers to the platform, surveilled them for signs of success, and then buried them when they became competitive threats. Lacking serious competition, Facebook has been able to hone a surveillance-based advertising model and impose ever-increasing burdens on its users." The FTC filed the amended complaint in the U.S. District Court for the District of Columbia, following the court's June 28 ruling on the FTC's initial complaint. The amended complaint includes additional data and evidence to "support the FTC's contention that Facebook is a monopolist that abused its excessive market power to eliminate threats to its dominance," the FTC said. "The FTC's Office of General Counsel carefully reviewed Facebook's petition to recuse Chair Lina M. Khan. As the case will be prosecuted before a federal judge, the appropriate constitutional due process protections will be provided to the company. The Office of the Secretary has dismissed the petition. The Commission vote to authorize staff to file the amended complaint in the U.S. District Court for the District of Columbia was 3-2," Facebook responded via its "Newsroom" account on Twitter: "We are reviewing the FTC's amended complaint and will have more to say soon."
Despite antitrust crackdowns around the world, Barron's believes shares of Facebook, along with other Big Tech names, are "unstoppable." Big Tech has hit a perilous moment but it won't last, Eric Savitz and Max Cherney wrote in this week's edition of Barron's. The five megacaps - Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG,GOOGL), Amazon (AMZN), and Facebook - still have the best business models on the planet, and their stocks look relatively cheap, the author notes. Investors should own them all, even if the regulatory headwinds take a while to abate, the publication adds.
TWITTER HEAD DABBLES IN CRYPTO MINING: Square (SQ) and Twitter (TWTR) CEO Jack Dorsey tweeted yesterday that he is "trying" to mine bitcoin with Compass Mining. Dorsey is a known cryptocurrency enthusiast and Square disclosed in its February earnings report that the company bought over $170M worth of bitcoin.
SNAP POACHES RIVAL IN AR PUSH: Snap (SNAP) is looking to do more with augmented reality - the overlaying of digital effects and information on top of real-world views - and it's tapping a longtime Facebook (FB) executive to oversee the effort, Bloomberg's Naomi Nix reported. Konstantinos Papamiltiadis, who spent nine years at Facebook, will become vice president of platform partnerships at Snap, the company said Thursday. Part of Papamiltiadis' role will be recruiting more augmented-reality creators and encouraging companies to incorporate Snap’s technology.
ZOOM LOSES APP DOWNLOAD SHARE: Download data for video collaboration applications like Zoom Video (ZM), Microsoft Teams and Google Meet reflect continued downward trends that started in September of last year, JPMorgan analyst Sterling Auty teold investors in a research note. The analyst believes economies opening back up and students heading on summer vacations are the primary factors. While Zoom still remains the dominant platform of choice, Google Meet has seen improving trends over the last couple of months following some upgrades in its product, says Auty. The analyst, however, cautions investors about trying to make direct correlations around Zoom revenue saying it is "too difficult to determine how many users have reduced activity enough to move either to a free offering or cancel some seats within an account." The average daily active users on the Zoom platform was 44.3M in Q2 ending in July, which compares to 49.3M in Q1 and the peak of 67.7M in Q2 last year.
SHUFFLING THE DECK: Arete analyst Rocco Strauss changed ratings and offered commentary on several social media stocks this week. Strauss upgraded Snap (SNAP) to Buy from Neutral with a price target of $83, up from $72. The analyst believes advertising pricing pressure on Facebook and Instagram will create a spillover effect, with Pinterest and Snap to benefit from advertising budgets shifting to second-tier platforms. In turn, the analyst downgraded Facebook to Neutral from Buy with an unchanged price target of $381. Facebook's growth is reliant on advertising pricing, which is likely to see pressure, Strauss told investors in a research note. The analyst sees Facebook shares moving "sideways" before initiatives such as the monetization of Reels and on-platform commerce gain traction into fiscal 2022. In regards to Twitter, he noted the company's "unfavorable" ad format mix puts it in the weakest spot among the social platforms. The company has a lack of video assets to capture TV dollars, said the analyst, who sees "various hurdles" for Twitter to meet its $7.5B 2023 sales target. Strauss raised the firm's price target on Twitter to $33 from $30 and reiterated a Sell rating on the shares.
INAUGURAL CONTENT REPORT: Facebook released the first of a series of reports that will give an overview of the most widely viewed content in News Feed, starting with domains, links, Pages and posts in the U.S. The Widely Viewed Content Report will be updated quarterly in the Transparency Center. According to the report, youtube.com, amazon.com and twitter.com were in the top five domains visited for News Feed content. Because this list focuses on non-Facebook links, it excludes Facebook and Instagram domains. It also excludes log-in pages for email services such as Gmail and link aggregators. In terms of Facebook pages visited, the top five was:
This is the first quarterly report detailing the most widely viewed content people see on Facebook. The report is one of several Facebook publishes with the aim of being transparent about what people experience on the platform. The company expects future editions of this report will expand to cover most widely viewed content seen in other countries and will continue to appear in conjunction with our Community Standards Enforcement Report.
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