X considers monthly payment to stop bots, Meta’s ad targeting receives regulatory scrutiny 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.
META VERIFIED LATEST:
At Meta Platform’s (META) Conversations Conference in Mumbai, Mark Zuckerberg announced the company will soon expand Meta Verified to businesses on Instagram, Facebook and WhatsApp. “We’ll start with a test in the coming weeks for businesses on Instagram and Facebook in select countries – and will expand to businesses on WhatsApp in the future. Meta Verified is built to help businesses more easily stand out on our apps and build confidence with their customers, including letting their customers know they’re chatting with the right business.” A Meta Verified business subscription will include business authentication with a verified badge, impersonation protection, access to account support, and other features, Meta says.
Facebook and Instagram currently have a $12-a-month subscription for Meta Verified services, which promises human help for issues on the apps, Kaya Yurieff of The Information reported. However, subscribers are now complaining about the service, claiming it doesn’t really
WHATSAPP ON IPAD:
Meta’s WhatsApp seems to be testing a version of its iOS app that is also optimized for iPad, The Verge’s David Pierce noted. The beta testers can test out version 22.214.171.124 of WhatsApp’s TestFlight app, which includes the new iPad app, the author said.
At the company’s Investor Day event on Tuesday, Pinterest (PINS) noted that it anticipates 3-5 year revenue growth CAGR in mid to high teens. Adjusted EBITDA margin is expected to be in the low 30% range achieved in 3-5 years. In addition, Rich Greenfield of LightShed tweeted: “$PINS guiding up to high end of range for revenue growth from mid-point at today’s investor day — just in from CFO Julia Brau Donnelly” Pinterest shares were up $1.08, or 4%, to $26.48 in afternoon trading. Citi upgraded the stock, the analyst left the company’s analyst day “incrementally confident” that engagement can continue to ramp, advertising innovation and its full-funnel approach to advertising can deliver improving monetization trends, and adjusted EBITDA margins can expand going forward. Pinterest’s product investments over the past year are improving the user experience and driving greater relevance and personalization of content across the platform, the analyst tells investors in a research note. The firm believes Pinterest’s guidance of mid- to high-teens revenue growth annually over the next 3-5 years and adjusted EBITDA margins expected to exceed 30% over the same period as achievable. As such, it finds the stock’s risk/reward as positive.
X, formally known as Twtter (TWTR), may be “moving to a small monthly payment” for usage, according to Tech Crunch, which sites a live-streamed conversation between Elon Musk, the owner of X, with Israeli Prime Minister Benjamin Netanyahu on Monday. During the conversation, Musk noted X was considering the aforementioned payment for the use of the X system. “He suggested that such a change would be necessary to deal with the problem of bots on the platform,” added Sarah Perez of TechCrunch.
LIFE AFTER LAYOFFS:
Meta is reviving employee perks like happy hours and branded t-shirts to boost morale following layoffs of over 20,000 people over the past year, Bloomberg’s Aisha Counts reported. One employee said they view this as a positive sign about the company’s performance, after two straight quarters beating Wall Street’s expectations on profits and revenue. Meanwhile, other employees say Meta has begun rehiring some workers who were previously laid off. A Meta spokesperson confirmed the company is bringing back amenities as employees return to the office, and commented that “Dinner, happy hour and company swag never really went away, merely adjusted given the pandemic and budgets.”
SCALING BACK TARGETED ADS:
Meta Platforms, after having built an “advertising juggernaut” by tailoring ads to Facebook and Instagram users based on what they liked, posted or bought on the company’s apps, is dialing back its ad targeting under mounting pressure from regulators around the world, wrote The Information’s Sylvia Varnham O’Regan.
ADDITIONAL ANALYST COMMENTARY:
HSBC initiated coverage of Zoom Video (ZM). The firm initiated coverage on 10 U.S. technology companies. The U.S. technology sector is experiencing tailwinds that will bolster operating performances for some companies, but not all, the firm told investors. The firm sees promise from artificial intelligence, but says the timing remains uncertain, while demand for cloud and digital transformation “is still strong.” HSBC prefers companies that are “at critical stages of their operations” with leveraged operating models poised to deliver better operating performances than peers given strong demand.
DA Davidson upgraded Pinterest. After attending the company’s first analyst day since its 2019 IPO, the firm raised its long-term adjusted EBITDA margin forecast to 34.0% from 25.0%, stating that the $10 increase in its price target “is a reflection of raising our near- and long-term sales and profit forecasts.”
RBC Capital kept a Sector Perform rating on Pinterest after the company’s “better than feared” Analyst Day event. Pinterest pre-announced Q3 modestly ahead of estimates, its long-term targets appear achievable or beatable, and its early learnings on the Amazon.com (AMZN) partnership were theoretically positive, the analyst tells investors in a research note. The firm adds that Pinterest’s engagement and conversion KPI’s were “encouraging”.
Susquehanna noted Pinterest hosted its Investor Day which confirmed management is executing on its playbook which was the result of its strategic review from roughly 15 months ago. A key emphasis has been, and remains, improving shoppability across the app. Management sees the company as occupying a unique position as the visual discovery platform at the intersection of search, social, and commerce and has taken significant steps to realize this vision.
Originally Posted September 20, 2023 – #SocialStocks: Growth prospects of Pinterest elevate shares
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