Elon Musk to be deposed this month over Twitter deal, TikTok confident data deal will calm security concerns 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.
COST CUTTING:
Meta Platforms (META) is looking to trim its costs by at least 10% within the next few months, Jeff Horwitz, Salvador Rodriguez and Miles Kruppa of The Wall Street Journal reported, citing people informed of the company’s plans. While some savings will come from budget cuts, much of it is expected to come from reduced employment, sources said. As part of its own cost cutting measures, Alphabet’s (GOOG, GOOGL) Google told roughly half of the more than 100 employees at the company’s startup incubator Area 120 they would need to find other jobs at the company within 90 days, people familiar with the decision told the paper. Meta spokesman Tracy Clayton referred to CEO Mark Zuckerberg’s July statement that the company would need to reallocate resources toward corporate priorities as pressures mount on the business. “We’ve been public about the need for our teams to shift to meet these challenges,” Clayton said. He said giving displaced employees a period to apply for new jobs is a means of retaining talent that Meta might otherwise lose. He declined to say how many employees have been affected by the recent moves. Among some Meta employees, the process of reapplying for jobs within a limited window internally is known as a sort of human-resources purgatory they call the “30 Day List.”
TELECOM INFRA PROJECT:
AmpliTech Group (AMPG) announced that it has been awarded membership into the Telecom Infra Project, TIP, a telecom focused organization formed by Meta. AmpliTech is joining the project shortly after the launch of its new division, TGSS, which is focused on designing, building, integrating, deploying, and maintaining complete 5G systems as a managed service. Founder and CEO Fawad Maqbool stated, “AmpliTech is proud to join the prestigious TIP organization and be recognized as a leading enabler of next-gen telecom networks that will power the future of mobile networking technology… Meta established the TIP program to draw attention to the lack of performant telecom infrastructure that enables developments like augmented reality/ virtual reality, metaverse, and high-resolution video streaming, and collaborate with industry leaders to develop solutions to this problem. AmpliTech currently offers solutions which include our leading edge performance Low Noise Amplifiers that enable data transfer to occur at higher speeds. We’re also working to develop key partnerships and offering our technical support to others in our constant search to be designed into programs that require AmpliTech’s differentiating and proven low noise technology,” concluded Maqbool.
TWITTER VS. MUSK:
Twitter (TWTR) will depose Elon Musk in Delaware on September 26-27 and the 28th if needed as part of the litigation in the Tesla (TSLA) CEO’s bid to walk away from his $44B agreement to buy the social media company, according to Reuters’ Tom Hals , citing a court filing made on Tuesday.
ANTITRUST LATEST:
New York and the Department of Justice are urging a federal appeals court to reinstate an antitrust suit against Meta by 48 state attorneys general that alleged a scheme to “buy or bury” rivals, Bloomberg’s Leah Nylen reported. New York Solicitor General Barbara D. Underwood says Meta doesn’t face any additional harm from the suit since it faces a similar one brought by the FTC, which alleges that Meta acquired Instagram and WhatsApp to keep them from growing into competitors.
SCALE BACK:
Meta’s Chris Cox has directed the New Product Experimentation division to scale back, Platformer’s Casey Newton reports. The division, which was created in 2019, will now focus on short-form video, according to a person familiar with the matter. Reportedly, the shake up comes amid concerns that Reels is failing to keep pace with TikTok. The Wall Street Journal reported this week that internal analysis in August found user engagement with Reels had actually fallen over the past four weeks.
SNAPCHAT FOR WEB:
Snap (SNAP) said in a blog post: “This Fall, we’re introducing new features to help keep conversations with friends fresh, fast, and easy to find! Our new Lock Screen Widgets, available now with iOS 16, keeps conversations with your bestie saved right to your lock screen so you can start chats with one tap… Widgets aren’t the only thing customizing your screen this Fall: New Chat Shortcuts at the top of our chat tab will make it easy to do things like spot unread Snaps and Chats from friends, see missed calls, and reply to stories… We are also introducing new tools like Question Stickers so you can AMA-all-day from your Snapchat Story, plus (and just in time for back to school) we’re making Snapchat for Web available to all!”
INSTAGRAM PAYMENT CAPABILITIES:
Last week, Instagram stated: “Each week, one billion people message a business across our apps-whether it’s chatting with brands, browsing products, asking for support or interacting with Instagram Reels. We want to help people start conversations with businesses they care about and help them find and buy products they love in an easy, seamless experience. That’s why we’re introducing a new way to make a purchase on Instagram-right where you chat with your customers. Now your business can accept payments in your Direct Messages. That means your customers can pay you without switching apps, giving them a more personalized and convenient shopping experience that can help drive sales and grow your business. There are no fees to accept payments in chat, and you’ll have access to 24/7 customer support if you need help.”
NFL TARGETED FOR DATA SHARING:
The National Football League, or NFL, was sued for allegedly sharing digital subscribers’ personal data with Meta Platform’s Facebook, Joe Schneider of Bloomberg reported. Consumers have claimed the companies pass on private information on Facebook without consent. The lawsuit alleges the social media company can easily find and view the NFL.com subscriber’s corresponding Facebook profile. The lawsuit is seeking $2,500 in compensation for each member of the class, as well as unspecified punitive damages.
TIKTOK CONFIDENT IN DATA DEAL:
A TikTok executive pushed back against senators investigating the company over its links to China and has expressed confidence in a deal with the U.S. government that would safeguard American users’ data, Meghan Bobrowsky of The Wall Street Journal reported. At a three-hour hearing on Wednesday, lawmakers pressed the company over issues of access that Chinese employees have to U.S. user data and if the company’s employees have connections to the communist party. TikTok COO Vanessa Pappas said the company is working to reach an agreement with the Committee on Foreign Investment in the US that has been looking into the company. “Our final agreement with the U.S. government will satisfy all national security concerns,” Papas said. TikTok recently decided to use Oracle (ORCL) as its cloud infrastructure partner to handle traffic for all US user data. At the hearing, Meta Platforms, Twitter, and YouTube also faced rounds of questioning.
AGE-APPROPRIATE DESIGN CODE ACT:
Social-media companies that operate in California will have to consider the health and well-being of children after a bill was signed into law last week by Governor Gavin Newsom, Meghan Bobrowsky of WSJ reported.. Starting in July 2024, the California Age-Appropriate Design Code Act will force Facebook, Instagram, TikTok and other social media companies to study products and features that are likely to be accessed by minors and mitigate any potential harm before releasing them to the public. “We’re taking aggressive action in California to protect the health and wellbeing of our kids,” Newsom said in a statement. The bill received bipartisan, unanimous support in both the Assembly and the state Senate. ON the other hand social-media companies contended that differing state laws regulating their apps would make compliance challenging.
ANALYST COMMENTARY:
Morgan Stanley analyst Brian Nowak raised the firm’s price target on Snap following Snap’s recent better than expected August ad update and announcement of a $500M cost reduction plan.
Baird analyst Colin Sebastian revisited his call on Pinterest (PINS) as he believes an earlier start to holiday shopping could help improve usage/engagement trends ahead of the Q3 earning report. He also sees potential catalysts from faster/improving execution on growth/monetization opportunities, including e-commerce capabilities, while the company’s profitable and scalable business model and lack of privacy/IDFA exposure should set Pinterest apart from display and social platforms.
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Originally Posted September 21,2022#SocialStocks: Meta to cut costs by at least 10% to alleviate pressures
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