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#SocialStocks: Facebook Announces Facebook News, Twitter Reports Earnings

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Facebook unveils Facebook News in the U.S., Twitter reported Q3 earnings results

Welcome to “#SocialStocks,” The Fly’s weekly recap of Wall Street’s reactions to social media stock news.

FACEBOOK UNVEILS FACEBOOK NEWS IN U.S.: 

Campbell Brown, VP, Global News Partnerships and Mona Sarantakos, Product Manager, News, at Facebook (FB) said in a blog post: “Today we’re starting to test Facebook News, a dedicated place for news on Facebook, to a subset of people in the US. News gives people more control over the stories they see, and the ability to explore a wider range of their news interests, directly within the Facebook app. It also highlights the most relevant national stories of the day. News articles will continue to appear in News Feed as they do today. As we talked to people and publishers, we identified key features to help make Facebook News valuable: Today’s Stories chosen by a team of journalists to catch you up on the news throughout the day Personalization based on the news you read, share and follow, so you can find new interests and topics and Facebook News is fresh and interesting every time you open it; Topic sections to dive deeper into business, entertainment, health, science & tech, and sports; Your Subscriptions, a section for people who have linked their paid news subscriptions to their Facebook account; Controls to hide articles, topics and publishers you don’t want to see. Facebook News will feature a wide range of content across four categories of publishers: general, topical, diverse and local news.”  

ANALYSTS BOOST FACEBOOK’S PRICE TARGET AHEAD OF EARNINGS: 

On October 29, Credit Suisse analyst Stephen Ju raised his price target for Facebook to $260 from $250 ahead of the company’s Q3 results. In a research note to investors, Ju said he is maintaining his Outperform rating based on potential better-than-expected ad revenue growth on product innovation, and said Street models are too conservative and underestimate the long-term monetization potential of other billion-user properties like Messenger and WhatsApp, accelerating free cash flow growth in 2020.

One day earlier, on October 28, Stifel analyst John Egbert raised his price target for Facebook to $205 from $180 after taking over coverage from Scott Devitt. The analyst maintained a Hold rating on the shares. Despite continued pressure from regulatory and antitrust scrutiny, Facebook “has taken a number of positive steps” toward improving privacy and data security on its platform and its core business trends remain “healthy,” Egbert said. Further, the analyst believes Facebook’s valuation “appears increasingly attractive relative to peers.” More value-oriented investors may come back to the story if Facebook can demonstrate the worst of its regulatory problems are behind it, contended Egbert.

TWITTER EARNINGS: 

On October 24, Twitter (TWTR) reported its third quarter results. The microblogging site reported Q3 adjusted earnings per share of 17c and revenue of $823.7M, against analyst expectations of 20c and $874.03M, respectively. Twitter also reported Q3 monetizable daily active usage, or mDAU, up 17%. “We drove strong growth in monetizable DAU, up 17% year-over-year, driven by ongoing product improvements. We’re continuing to improve relevance while testing ways to make it easier for people to find what they are looking for on Twitter,” said Jack Dorsey, Twitter’s CEO. “We also continue to make progress on health, improving our ability to proactively identify and remove abusive content, with more than 50% of the Tweets removed for abusive content in Q3 taken down without a bystander or first person report.” Average monetizable daily active usage was 145M, compared to 124M in the same period of the previous year and compared to 139M in the previous quarter. Average US mDAU was 30M, compared to 26M in the same period of the previous year and compared to 29M in the previous quarter. Average international mDAU was 115M, compared to 98M in the same period of the previous year and compared to 110M in the previous quarter.

The company also provided guidance for the fourth quarter. Twitter sees Q4 revenue of $940M-$1.01B, against consensus estimates $1.06B. Twitter said: “Our guidance for Q4, as in prior quarters, reflects the most likely range of outcomes based on our current visibility. We have considered the rebound in our advertising business in September, the strength of our bookings, and the organic events and product and service launches expected in Q4, along with the lingering headwinds we expect from the previously discussed revenue product issues we experienced in Q3. While we are taking steps to remediate these issues, we expect them to continue to weigh on the overall performance of our advertising business in the near term. Specifically, we expect that, on a combined basis, moderated performance in our Mobile Application Promotion product and the previously discussed issues in our personalization and data settings will likely result in 4 or more points of reduced year-over-year growth for total revenue in Q4, up from 3 or more points of impact in the third quarter. The increase reflects a full-quarter impact in Q4 vs. only a partial-quarter impact in Q3. These headwinds are incorporated in our outlook.” 

Originally Posted on October 30, 2019 – #SocialStocks: Facebook Announces Facebook News, Twitter Reports Earnings

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