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#SocialStocks: TikTok Aims to Ease Advertisers Amid Heightened U.S. Scrutiny

Posted March 23, 2023 at 9:45 am
Andrew Perez
The Fly

Facebook to implement blue check mark, Zoom strikes deal with MLB 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.


TikTok has sought to reassure advertisers in recent days that the app is unlikely to be banned in the U.S. as some companies begin to make contingency plans for their ad spending, The Wall Street Journal’s Patience Haggin and Suzanne Vranica reported, citing people familiar with the situation. The Biden administration has raised national security concerns about TikTok and is demanding that its Chinese owners sell their stakes in the popular video-sharing app or face a possible ban, The Wall Street Journal reported. TikTok is owned by Beijing-based ByteDance.

According to a Reuters story on Monday by David Shepardson, short-video sharing app TikTok currently has 150M monthly active users in the United States, exceeding the 100M it said it had in 2020. “The Chinese-owned app confirmed the figure ahead of TikTok CEO Shou Zi Chew’s testimony Thursday before the House Energy and Commerce Committee,” added the Reuters story.

The Justice Department began an investigation late last year into the surveillance of American citizens by ByteDance, three people familiar with the matter told The New York Times’ Glenn Thrush and Sapna Maheshwari. The department’s criminal division, the F.B.I. and the U.S. attorney for the Eastern District of Virginia are investigating  the Chinese company. 

TikTok is mulling its options and conversations with potential buyers are “heating up” as the company explores possible deals it considered when President Trump had threatened to ban the app in 2020, a source close to TikTok told Lydia Moynihan of The New York Post’s “On The Money” last week. TikTok’s Chinese owners have publicly resisted pressure from the Biden administration to sell the video app.

Pressure has mounted on TikTok since last week when the Biden White House called for Beijing-based owner of TikTok, ByteDance, to sell its stakes or face a ban in its operations, according to John D. McKinnon of WSJ.. The report indicated that the threat represents a major shift in the administration’s policy, which has been under fire from some Republicans suggesting that a tougher stance is needed to deal with the perceived security threat from TikTok.

Benchmark said it is “skeptical this latest development is nothing more than tough talk by the current administration to appease pressures” from bipartisan bills in the Congress. The firm sees “significant obstacles to a ban indirectly pointed at China” on both political and legal grounds and sees “a low probability” of any formal TikTok ban in the U.S. through 2024. Consequently, the firm sees “no ‘Goodbye TikTok’ party for Meta and Snap anytime soon.”


Adults in the U.S. can soon have a blue check mark on Facebook-as long as they pay and show identification, WSJ’s Joseph Pisani reported. Meta Platforms (META), which owns Facebook and Instagram, said Friday it is rolling out its verified subscription service in the U.S. after testing it in Australia and New Zealand last month.


In a regulatory filing, Snap (SNAP) disclosed that its COO Jerry Hunter sold 69.8K shares of common stock on March 16th in a total transaction size of $763.9K and that its CFO Derek Andersen sold 49.2K shares of common stock on the same day for $539.2K.


Twitter downranked rivals’ corporate accounts including Meta’s Instagram, Snap and TikTok since December, as well as non-rivals like the US @HHSGov account, Platformer’s Zoe Schiffer said via Twitter. Schiffer noted that this means these tweets don’t show on the “For You” tab.


Meta Platforms, which announced earlier last week that it expects to reduce its team size by around 10,000 people and to close around 5,000 additional open roles that haven’t yet been filled, has started carrying out the cuts by letting go about 1,500 employees in recruiting and human resources, people familiar with the matter told Bloomberg’s Ed Ludlow. Meta founder and CEO Mark Zuckerberg will address staff later today, one source said.


Major League Baseball, or MLB, and Zoom Video (ZM) announced a partnership for the league, aimed to enhance MLB games and the fan viewership experience. As the new Official Unified Communications Platform of MLB, Zoom Contact Center and the Zoom platform technology will power new elements of Major League games and broadcasts. Zoom chief marketing officer, Janine Pelosi said: “MLB brings together tens of millions of passionate fans every season. Zoom’s rapid pace of innovation and obsession with making human connection easier and better, is crucial to help MLB evolve its experience and deliver unprecedented transparency and access to its fans. With MLB leveraging Zoom Contact Center and Zoom’s all-in-one collaboration platform, we are able to truly show the world how a historical brand can continue to innovate and unlock new possibilities.”

Benchmark analyst Matthew Harrigan lowered the firm’s price target on Zoom to reflect a more conservative market-linked multiple and keeps the same rating on the shares, stating that the partnership deal with Major League Baseball as MLB’s Official Unified Communications Platform “highlights the breadth of Zoom’s UC competencies as well as introducing a high profile partner with superior consumer awareness.” The firm, which calls the partnership with MLB “a marketing coup,” remains constructive on Zoom’s long-term UC growth potential.


KeyBanc upgraded Meta Platforms. The firm believes the advertising market us settling “on more stable footing,” which shifts the firm’s preference back towards Meta. With its latest reductions, Meta’s 2023 operating expense guidance has been reduced by 10%, the analyst tells investors in a research note. When coupled with CPMs showing signs of improvement, KeyBanc believes the company’s operating margins should get to at least 31% by 2024. As a result, it projects Meta will report earnings per share of $10.57 and $13.39 for 2023 and 2024, respectively, 6% and 9% above consensus.

Additionally, Morgan Stanley upgraded Meta Platforms. The analyst cited Meta’s “structural pivot” to focusing on efficiency and return on invested capital, improving revenue and engagements trends, “surging” Reels monetization and “further revenue call options” in artificial intelligence, subscriptions, and click-to-message for the upgrade. The firm also sees the company as the “most durable mega cap” if the consumer weakens. The stock’s valuation still looks attractive, trading at a 33% discount to peers on a growth adjusted basis, the firm told investors in a research note.

Lastly, Edward Jones analyst David Heger also upgraded Meta. The company is reducing expense expectations, which addresses concerns about heavy spending on its metaverse initiative, the analyst told investors. The firm also thinks Meta’s advertising revenue could stabilize and return to modest growth by the end of 2023 as the online ad market starts to recover.

Originally Posted March 22, 2023 – #SocialStocks: TikTok aims to ease advertisers amid heightened U.S. scrutiny

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