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#SocialStocks: TikTok and Pinterest Announce New Ad Offerings

Posted May 4, 2023 at 11:15 am
Andrew Perez
The Fly

Twitter founder Jack Dorsey says company went south after sale, social media stocks report 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.


TikTok said it is launching a new product that will make it possible for publishers to sell ads alongside their posts, a shift for the video-sharing app, which historically has focused on independent creators, The Wall Street Journal’s Alexandra Bruell reported. The product, Pulse Premiere, is the evolution of TikTok’s Pulse program, which allows an elite group of creators to collect half the revenue from video ads that appear just after their TikTok posts. The new product will offer similar perks for accounts from select publishers, such as Conde Nast, BuzzFeed (BZFD) and NBC (CMCSA). While Pulse is only available to the top 4% of its creators’ posts-based on metrics such as likes, watch time and comments-the new product will sell ads against all posts from participating publishers, the company said.


The Federal Trade Commission, or FTC, proposed changes to the agency’s 2020 privacy order with Facebook after alleging that the company has failed to fully comply with the order, misled parents about their ability to control with whom their children communicated through its Messenger Kids app, and misrepresented the access it provided some app developers to private user data. “Facebook has repeatedly violated its privacy promises,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The company’s recklessness has put young users at risk, and Facebook needs to answer for its failures.” As part of the proposed changes, Meta, which changed its name from Facebook in October 2021, would be prohibited from profiting from data it collects, including through its virtual reality products, from users under the age of 18. It would also be subject to other expanded limitations, including in its use of facial recognition technology, and required to provide additional protections for users. This is the third time the FTC has taken action against Facebook for allegedly failing to protect users’ privacy, the FTC notes. The proposed changes to the 2020 order, which would apply to Facebook and Meta’s other services such as Instagram, WhatsApp, and Oculus, include: Blanket prohibition against monetizing data of children and teens under 18; Pause on the launch of new products, services; Extension of compliance to merged companies; Limits on future uses of facial recognition technology; and Strengthening existing requirements.

Andy Stone, head of Communications Director at Meta Platforms (META), tweeted a statement from the company on the FTC’s “political stunt,” stating that Meta “will vigorously fight this action and expect to prevail.”


Meta Platforms said that the Meta Quest Gaming Showcase returns June 1 at 10:00 am PT on Twitch, Facebook, YouTube, and in Meta Horizon Worlds. “This is a banner year for VR, and the third annual Meta Quest Gaming Showcase is our biggest celebration of the depth and breadth of content across the Meta Quest Platform yet,” the company said. “We’ll have over 40 minutes of content, including a brand-new pre-show of game updates and debut trailers to help you count down before the Showcase kicks into high gear, as well as a post-show developer roundtable for a deep-dive conversation around some upcoming games. And as in years past, you can expect new game announcements, gameplay first-looks, updates to existing games, and more during the main event.”


Meta Platform is eyeing raising $7B in a five-part bond sale, Bloomberg’s Olivia Raimonde and Michael Tobin reported, citing a person familiar with the matter. The longest bond in the offering, a 40-year security, could yield 215 basis points over Treasuries, the authors noted.


Twitter (TWTR) co-founder Jack Dorsey said Elon Musk hasn’t proved himself to be the best leader for twitter and said it “all went south” when the company was sold to him, Ginger Otis and Alexa Corse of The Wall Street Journal reports. On a series of posts on Bluesky, Dorsey shared his opinion on Musk and the sale of Twitter. When asked if he thought Musk was the best possible leader for the company, Dorsey replied with “no” and then added “Nor do I think he acted right after realizing his timing was bad. Nor do I think the board should have forced the sale. It all went south.”


Meta managers built up “kingdoms” as headcount surged, before layoffs led to an unprecedented morale crisis and lower confidence in CEO Mark Zuckerberg, The Washington Post’s Naomi Nix reported.


Pinterest (PINS) blogged earlier on Thursday: “We’re announcing that we’re opening up third-party ad demand on Pinterest. As user engagement with shoppable content on Pinterest continues to grow, we’re pleased to have selected Amazon (AMZN) as our first partner for third-party ads. The partnership with Amazon will bring more brands and relevant products to the platform combined with a seamless on-Amazon buying experience for consumers and offer advertisers strong performance. Over 463 million people come to Pinterest each month to create a life they love. Brands and products are a critical piece of this journey, enabling Pinners to move easily from inspiration to action and advertisers to realize value in connecting with users with high commercial intent. Our partnership with Amazon will allow us to scale these efforts in meaningful ways. “This milestone partnership will add to the great brands already on the platform and provide more comprehensiveness, shoppability, and a best-in-class buying experience for users, along with greater performance for brands and advertisers,” said Bill Ready, CEO of Pinterest. “This aligns with our goal of making every Pin shoppable, so that we can enable as many users as possible to bring their dreams to life.” The partnership will be a multi-quarter implementation, which we expect to begin rolling out later in 2023.”


New York and other states had sued over Meta’s Instagram and Whatsapp deals, but an appeals court has upheld a dismissal of the antitrust case, according to Bloomberg.


Sprout Social (SPT) surpassed consensus in its first quarter earnings report. “We are proud to deliver accelerating growth in key leading indicators, alongside record free cash flow,” said Justyn Howard, Sprout Social’s CEO and co-founder. “Customers that spend greater than$2,000 annually with us now account for greater than 95% of our ARR and delivered 35% ARR growth in Q1, building a strong foundation for accelerating ARR growth this year. Our pricing changes are performing well, our partnerships continue to strengthen and our multi-year investments in AI & automation each provide confidence into durable and efficient growth.” Baird lowered the firm’s price target on Sprout Social. The firm said they reported a somewhat noisy quarter and while we remain encouraged and confident in the continued move up-market, we expect this “back-end-loaded” ARR scenario will raise questions near term.

While Snap (SNAP) beat analyst expectations in terms of earnings per share, it fell slightly short revenue wise. The company reported Q1 DAUs of 383M, up 15% year-over-year. Snap declined to provide any guidance for Q2, but did mention internal revenue outlook of $1B-$1.09B in a letter to shareholders. “Our community continues to grow, reaching 383 million daily active users in Q1, and we are working to deepen engagement with our content platform while building innovative new features and services like My AI,” said Evan Spiegel, CEO. “We are working to accelerate our revenue growth and we are using this opportunity to make significant improvements to our advertising platform to help drive increased return on investment for our advertising partners.” In his shareholder letter, CEO Evan Spiegel said: “The macroeconomic environment continues to be a headwind to revenue growth, and we are using this opportunity to make significant improvements to our advertising platform, including transitioning to a new ad format that is consistent across the content Snapchatters view on our platform and optimizing our webview experience to improve in-session conversions. We’ve also identified new areas to invest in machine learning to accelerate our content and ad platform ranking and optimization efforts, and we are excited about the long-term potential of our business as we identify new ways to improve return on investment for advertisers… We will continue to invest with a long-term perspective, especially in areas that support our three strategic priorities: growing our community and deepening their engagement, accelerating and diversifying our revenue growth, and investing in augmented reality. We are now making strategic investments in cloud-based ML infrastructure, which we believe will improve ranking and personalization of our content and ad platforms and lead to a stronger return on investment for our advertising partners. While there is still a lot of work to be done, our large and growing community, track record of innovation, strong balance sheet, and the adjustments we have made to drive focus and reduce our cost structure enable us to invest over the long term to best support our advertising partners and make the right investments for our business.” Shares fell nearly 20% after the quarterly report. Barclays lowered the firm’s price target on Snap. The company continues to struggle to rebuild investor and advertiser confidence, as evidenced by the limited improvement through Q1 and into Q2, while the overall digital ad market ramps, the firm told investors in a research note. The firm’s confidence is “mixed,” but it continues to see Snap as a “highly innovative company,” evidenced by the recent product launches like MyAI.

Shares of Pinterest also fell, nearly 10%, after reporting first quarter results. The company noted global MAUs of 463M during its Q1 beat. In terms of growth, the company anticipates more of the same. “Our current expectation is that Q2 revenue will grow roughly in-line with the growth we saw in Q4 2022 and Q1 2023. We expect our Q2 non-GAAP operating expenses to grow low teens on a percentage basis quarter-over-quarter.”  RBC Capital lowered the firm’s price target on Pinterest to $28 from $30 and kept a Sector Perform rating on the shares. The company’s Q1 report saw “disappointing” out-quarter commentary that overshadowed the management’s ongoing bullishness around rising engagement and monetization, the firm told investors in a research note. ON the other hand, Rosenblatt raised the firm’s price target on Pinterest. The company’s Q1 results were better than expected, but its Q2 guidance was “squishy,” the analyst tells investors. The firm raises its price target on the stock because the new Amazon partnership looks “interesting,” Rosenblatt says.


Huber Research upgraded Meta Platforms.

RBC raised the firm’s price target on Meta Platforms. The company’s Q1 results were better-than-feared and the simple three-fold bull case – dominating engagement vs. competition, restoring lost signal post-IDFA, and cutting costs – is increasingly coming into view, the firm told investors. RBC believes that further upside is still achievable for Meta on engagement share gains and the ongoing conversion improvement eventually leading to incremental spend.

Originally Posted Andrew Perez – #SocialStocks: TikTok and Pinterest announce new ad offerings

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