#SocialStocks: Biden issues executive order on AI safety

X reportedly valued at $19B, recapping third quarter earnings 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.

X VALUATION: 

X, formerly Twitter (TWTR), is now valued at $19B, based on the company’s employee equity compensation plan, Kylie Robison of Fortune reported. X, owned by Tesla (TSLA) CEO by Elon Musk, is giving employees restricted stock units at a $45 share price, a source familiar with the matter told the website. The company previously offered employees stock in March at a $20B valuation, Robison noted.

AI EXECUTIVE ORDER: 

President Biden issued a “landmark” Executive Order to “ensure that America leads the way in seizing the promise and managing the risks of artificial intelligence,” or AI, the White House announced. “The Executive Order establishes new standards for AI safety and security, protects Americans’ privacy, advances equity and civil rights, stands up for consumers and workers, promotes innovation and competition, advances American leadership around the world, and more. As part of the Biden-Harris Administration’s comprehensive strategy for responsible innovation, the Executive Order builds on previous actions the President has taken, including work that led to voluntary commitments from 15 leading companies to drive safe, secure, and trustworthy development of AI.”

MILESTONE: 

Zoom Video (ZM) announced that Zoom AI Companion, the company’s generative AI assistant, has reached a milestone less than two months after its launch, with more than 125,000 accounts using AI Companion, generating more than one million meeting summaries. Zoom also announced new capabilities, additional language support, and further enhancements to existing capabilities for AI Companion.

AD FREE NOT FREE: 

Meta Platforms (META) announced that it will offer people in the EU, EEA and Switzerland the choice to pay a monthly subscription to use Facebook and Instagram without any ads. They can alternatively continue to use these services for free while seeing ads that are relevant to them, Meta said. “We believe in a free, ad-supported internet – and will continue to offer people free access to our personalized products and services regardless of income. Whether people choose to use our products for free with ads or subscribe to stop seeing ads, we are committed to keeping people’s information private and secure, under our own policies as well as the EU’s General Data Protection Regulation.”

WE MET ON X: 

In a company-wide video meeting on the anniversary of Musk’s Twitter takeover, Musk insisted the now-renamed X will be a “fully fledged” dating site in 2024, as well as a digital bank, two people present for the video call told Insider’s Kali Hays. Musk did not get into details of how exactly X would become a dating app, if there was any user demand for such features, or what further product changes would be made to turn it into one, one of the people said.

Shares of Match (MTCH) and Bumble (BMBL) fell 2.7% and 1.5%, respectively, on Friday on the news, but BofA noted that it does not see the potential launch of a dating service by X as a material risk to Match or Bumble users. The firm cites their competitive moats, the fact that dating app users often use multiple apps and limited traction with Meta’s (META) dating service years after launch to support its view of limited risk to Match and Bumble from X’s efforts. In its view, the bigger risk to Match and Bumble growth is when total online dating market users inflect back to growth, added the firm.

EARNINGS: 

Shares of Pinterest (PINS) gained over 13 % after the company’s third quarter results and corresponding fourth quarter guidance. The company beat expectations both in earnings per share and revenue. Q3 monthly active users were up 8% from last year to 482M. “We continued to accelerate the business in Q3,” said Bill Ready, CEO of Pinterest. “We are driving strong revenue performance, robust global MAU growth, and substantial margin expansion. As we lean into Pinterest’s unique differentiators as a visual search, discovery, and shopping platform, we’re finding our best product market fit in years. Our users are engaging deeply and we’re delivering better results for advertisers through improved measurement and innovation across the full funnel. We’re making significant progress and are continuing to execute on the opportunity ahead.” BofA upgraded Pinterest to Buy from Neutral. The company’s position versus peers is “much improved” as quarter-over-quarter underperformance shifts to outperformance, as expected in Q4, the analyst tells investors. With the company much closer to the start of its Amazon (AMZN) deal ramp, the firm expects more acceleration in the first half of 2024, the analyst added. The firm has renewed confidence in the new management team given recent product execution, the analyst also said.

While Meta Platforms also beat analyst consensus in its Q3 report, shares responded by dropping 3%. The company provided Q4 revenue guidance as well as full-year 2024 expense guidance. “We expect fourth quarter 2023 total revenue to be in the range of $36.5-$40B. Our guidance assumes a foreign currency tailwind of approximately 2% to year-over-year total revenue growth in the fourth quarter, based on current exchange rates. We anticipate that our full-year 2023 total expenses will be in the range of $87-89B, lowered from our prior range of $88-91B. This outlook includes approximately $3.5B of restructuring costs related to facilities consolidation charges and severance and other personnel costs. We expect Reality Labs operating losses to increase year-over-year in 2023. We are also sharing a preliminary outlook for 2024 expenses, capital expenditures and our tax rate. We expect full-year 2024 total expenses to be in the range of $94-99B. We continue to expect a few factors to be drivers of total expense growth in 2024: First, we expect higher infrastructure-related costs next year. Given our increased capital investments in recent years, we expect depreciation expenses in 2024 to increase by a larger amount than in 2023. We also expect to incur higher operating costs from running a larger infrastructure footprint. Second, we anticipate growth in payroll expenses as we work down our current hiring underrun and add incremental talent to support priority areas in 2024, which we expect will continue to shift our workforce composition toward higher-cost technical roles. Finally, for Reality Labs, we expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem. We expect 2023 capital expenditures to be in the range of $27-29B, updated from our prior estimate of $27-30B.” Facebook daily active users were 2.09B on average for the month of September, up 5% year-over-year. As of September 30, monthly active users were 3.05B, up 5%. On its conference call meta said AI will be biggest investment area in 2024. and that it is deprioritizing a number of non-AI projects across the company. Loop Capital maintained a Buy rating on Meta while boosting the firm’s FY23 EPS and its FY24 EPS view. The firm is encouraged by the continued product momentum surrounding Reels, Advantage+ and messaging, with “”high interested” in recent launches of gen-AI products across much of Meta’s family of apps, the firm told investors in a research note. Loop also notes that the stock price on Meta is now lower despite the higher earnings outlook, with valuation for shares also being about 10% lower than pre-earnings and with the stock now trading at a 5% discount to the S&P 500.

—

Originallly Posted November 1, 2023 – #SocialStocks: Biden issues executive order on AI safety