Meta tests one interface for Facebook and Instagram, Elliot calls for Pinterest sale, and other notable stories from this week.
Welcome to “#SocialStocks,” The Fly’s weekly recap of Wall Street’s reactions to social media stock news.
TWITTER VS. MUSK:
Twitter (TWTR) and Tesla (TSLA) CEO Elon Musk are “still negotiating” over key deposition dates as their Delaware trial nears, The New York Post’s Theo Wayt and Josh Kosman reported. However, the deposition schedule changes are not due to settlement talks between Musk and Twitter. Two sources familiar with the matter say the timing for Musk’s deposition remains up in the air, even though a court filing on Tuesday indicated Musk would be deposed by Twitter’s lawyers on October 6 and 7. “The Elon date for October is still a proposal,” one of the sources said. “Not confirmed yet. Sides still negotiating when and where it will be.” On the other hand, it is unclear when Twitter CEO Parag Agrawal will be deposed after he withdrew from a scheduled deposition on Monday due to unspecified personal reasons, the sources noted. Musk’s team has reportedly been insistent about interviewing Agrawal in person.
In a hearing, Twitter said Elon Musk’s consultants estimated spam at 5%-11% of users and that Musk failed to provide Signal messages, including with Marc Andreessen, The Financial Times’ Hannah Murphy and Sujeet Indap reported. Twitter claims Musk’s consultants did not support his claim that the number of fake accounts on the social media platform is “wildly higher” than the company’s estimates. Musk is looking to pull out of a $44B deal to buy Twitter, claiming that it misled investors and regulators about the number of fake and spam accounts on the platform.
Last week, Bloomberg reported a judge is letting Musk add Twitter’s $7.8M severance payment to whistleblower Peiter Zatko to his counterclaims challenging his buyout of the company,
Some major advertisers, including Dyson, Mazda and Ecolab (ECL), have suspended their marketing campaigns or removed their ads from parts of Twitter over concerns that their ads are appearing alongside tweets soliciting child pornography, the companies told Reuters. Ads for at least 30 brands, ranging from Walt Disney (DIS), Comcast’s (CMCSA) NBCUniversal and Coca-Cola (KO), have appeared on the profile pages of Twitter accounts that peddle links to exploitative material, according to Reuters’ review of new research about child sex abuse online from cybersecurity group Ghost Data, the report noted.
SHUTTERING INFLUENCE OPERATIONS:
Meta Platforms (META) on Tuesday shared the company’s findings into two covert influence operations – from China and Russia – “that we took down for violating our policy against Coordinated Inauthentic Behavior. We shared information with our peers at tech companies, security researchers, governments and law enforcement so they too can take appropriate action.” Ben Nimmo, Global Threat Intelligence Lead and David Agranovich, Director, Threat Disruption, said the Chinese-origin influence operation ran across multiple social media platforms, and was the first one to target US domestic politics ahead of the 2022 midterms and Czechia’s foreign policy toward China and Ukraine. Meanwhile, the Russian network targeted primarily Germany, France, Italy, Ukraine and the UK with narratives focused on the war and its impact through a sprawling network of over 60 websites impersonating legitimate news organizations.
Meta has begun testing a single interface to manage Facebook and Instagram accounts and is streamlining registration to help users create accounts on both services, the company said in a statement. Robert d’Apice, Director of Product Management, commented: “People can get notifications for both Facebook and Instagram profiles in one place if they choose to add them to the same Accounts Center. People can now create an account with their existing Facebook or Instagram login, and use it to sign up for additional accounts and profiles… We know that many people use more than one of our apps to pursue different interests, reach a broader audience or share different aspects of who they are with different groups of people. With that in mind, we’re simplifying the process of creating and switching between accounts and profiles.” The executive added: “While these changes are currently limited to Facebook and Instagram, we’ll continue to explore how to improve connected experiences across all of our technologies.”
Instagram has also started testing home feeds without a shopping tab, The Verge’s Mia Sato reported. Some platform users have noticed recently that the shopping tab, which was on the bottom navigation bar, has been replaced with a notifications tab, the author notes. “As part of our continued work to simplify your Instagram experience, we are testing a few changes to the main navigation bar at the bottom of the app with a small number of people,” Meta spokesperson Anne Yeh said.
EU TELCOS CALL OUT BIG TECH:
European telecom companies, including Deutsche Telekom (DTEGY), Orange (ORAN), Telefonica (TEF), and Vodafone (VOD), are calling for Meta (META), Google (GOOGL), Netflix (NFLX), and others to share network costs, citing the energy crisis and EU climate change goals, Reuters’ Foo Yun Chee reported. The European Commission is seeking feedback from both sides before making a legislative proposal that could force tech companies to help pay for the roll-out of 5G and fiber cables across the EU. “Costs of planning and construction works are increasing. Prices for fiber optic cables, for example, have almost doubled in the first semester 2022. Similarly, the hikes in energy prices and in the prices of other inputs are also hitting the connectivity sector,” the European companies said.
Last year, Apple (AAPL) released a major privacy update to iOS that made it more difficult for apps to track user behavior beyond their own borders, but now a new lawsuit alleges Meta continued to snoop on users through a workaround, Taylor Hatmaker of TechCrunch reported. The complaint alleges Meta evaded Apple’s new restrictions by monitoring users through Facebook’s in-app browser, which opens links within the app. The complaint was filed in the U.S. District Court for the Northern District of California. The suit also alleges Meta is breaking privacy laws at both the state and federal levels, such as the Wiretap Act. Another similar complaint was filed last week.
A Texas jury has ordered Meta to pay Voxer $174.5M in damages after the walkie-talkie app company accused the tech giant of patent infringement, Insider’s Isobel Asher Hamilton reported, citing court documents. Voxer, which filed the lawsuit in 2020, said Facebook representatives reached out in 2012 to discuss a possible partnership, but never entered a collaboration. Voxer also accused the company of using its patented communications technology in Facebook Live and Instagram Live features.
Bertrand Lanciault III, the head of compliance and risk at Peloton (PTON), has left the company and joined Snapchat parent Snap (SNAP) to oversee its compliance and integrity efforts, The Wall Street Journal’s Mengqi Sun reported. Lanciault joined Peloton in February 2021. Michael Del Negro, who joined Peloton in January as its vice president of product safety compliance, has been named the company’s acting head of compliance, risk and ethics and has served in this role since August, a Peloton spokeswoman said.
ELLIOT CALLS FOR PINTEREST SALE:
In a feature article regarding activist investor Elliott Management led by Paul Singer, Barron’s reporter Carleton English noted that the hedge fund amassed a nearly 2% stake in PayPal (PYPL) over the summer and that in the past year the fund has taken activist stakes in Pinterest (PINS), Cardinal Health (CAH), Western Digital (WDC), Suncor Energy (SU), and Switch (SWCH) as well. Elliott now has a 9% stake in the Pinterest and wants to see the company accelerate efforts to monetize its base of 433M monthly users, or put itself up for sale, according to a person familiar with Singer’s demands, English said. “The fact that Elliott owns stakes in both PayPal and Pinterest has raised prospects of the hedge fund brokering a merger, though people close to both companies say a deal isn’t on the table,” the report added.
Twitter’s Privacy Center said in a blog post: “We want to let you know that we recently fixed a bug that allowed Twitter accounts to stay logged in from multiple devices after a voluntary password reset. In order to help ensure the safety and security of everyone that may have been affected, we’ve proactively logged people who may have been affected out of active sessions. We take our responsibility to protect your privacy very seriously and it is unfortunate this happened. While there is no action for you to take, we want to share more about the steps we’ve taken and best practices for keeping your account safe…We learned of a bug that allowed some Twitter accounts to stay logged in on multiple mobile devices after a voluntary password reset. That means that if you proactively changed your password on one device, but still had an open session on another device, that session may not have been closed. Web sessions were not affected and were closed appropriately. This bug was introduced after we made a change to the systems that power password resets last year. We have directly informed the people we were able to identify who may have been affected by this, proactively logged them out of open sessions across devices, and prompted them to log in again. We realize this may be inconvenient for some, but it was an important step to keep your account safe and secure from potential unwanted access.”
Truist analyst Youssef Squali lowered the firm’s price target on Meta Platforms but kept his rating on the shares as part of a broader research note on Internet names. The analyst says he is reducing expectations for the group based on stronger FX headwinds and the prospects for weakening macro. Squali adds that his projections are now baking in a mild recession in 2023 which should pressure growth, even though he believes that the companies’ “strong cost containment” should help protect margins.
Piper Sandler analyst Thomas Champion raised the firm’s price target on Snap and reiterated a Neutral rating on the shares after speaking with the company. Snaps quarter-to-date growth in Q3 was slightly better than forecast, driven by healthier spend by advertisers in key verticals, Champion tells investors in a research note. In addition, cost reductions post layoffs should flow through the model for fiscal 2023, says the analyst.
JPMorgan analyst Doug Anmuth raised the firm’s price target on Snap and maintained his rating on the shares. The analyst increased estimates ahead of the company’s Q3 results to account for better advertising growth and its recent headcount reductions. Anmuth is “encouraged” that Snap has seen real ad improvement through the quarter, but cautions that the acceleration is also a function of easier comps. He believes the overall online ad market “remains choppy.” The macro environment, iOS platform changes, and increased competition from TikTok will continue to pressure Snap’s results, Anmuth tells investors in a research note.
Credit Suisse analyst Fred Lee initiated coverage of Zoom Video with a Neutral rating. Zoom has the most significant risk in his coverage universe in both directions, and while it is in the very early innings of its enterprise telephony ramp, 45% of revenues today consist of low-touch online, predominantly consumer, business, Lee tells investors in a research note. The analyst is Neutral-rated due to the drag decreasing new ARR in online continues to have on the overall business, he says.
Additionally, MoffettNathanson analyst Sterling Auty initiated coverage of Zoom Video.
Piper Sandler analyst Clarke Jeffries estimates Sprout Social’s Fortune 500 market share has doubled in the last two years to greater than 17%. The company’s “high-end traction remains strong” in 2022 with several key wins, including Qualcomm, General Dynamics, Carvana, Danaher Corp, XPO Logistics, and conversion of Salesforce over to Sprout Social this month, Jeffries tells investors in a research note. The analyst says Sprout’s opportunity for continued market share gains “seems favorable” with greater than one-third of the Fortune 500 using “non-competitive solutions.” He reaffirmed his rating on the shares.
Originally Posted September 28, 2022 – #SocialStocks: Details of Musk’s deposition by Twitter still being hammered out
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