#SocialStocks: Zoom unveils more details on AI Companion at Zoomptopia

Meta plans layoffs for metaverse-focused business, new augmented reality devices await FCC approval 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.

MANIPULATED MEDIA: 

Meta Platform’s (META) Oversight Board said via X, formerly known as Twitter: “In the coming days the Oversight Board will announce a new case regarding a user-appeal to remove an altered video of President Joe #Biden on Facebook. This case will examine issues related to manipulated media on Meta’s platforms and the company’s policies on misinformation, especially around elections. Once the case is announced, the case will open for public comments. This vital component of our work allows external stakeholders to inform the Board’s deliberation and review.”

DEPARTURE: 

Meta VP of Media Partnerships Campbell Brown is stepping down from the role in the fall but staying on as a consultant, as Meta looks to mostly back away from elevating news content and instead focus on entertainment and viral trends, Sara Fischer of Axios reported. Brown joined Meta, then Facebook, in 2017 to lead its inaugural news partnerships team after spending 14 years as an anchor and correspondent with CNN and NBC News.

AI ASSISTANT: 

Zoom Video (ZM) said that all the new AI Companion capabilities announced at its Zoomtopia event are available at no additional cost with the paid services assigned to one’s Zoom user account. The company said that AI Companion is a generative AI assistant on the Zoom platform, with new capabilities including meeting summary notes, the ability to generate entire email messages based on a simple prompt, more Zoom Whiteboard features, and smart recordings for meetings.

LAYOFFS: 

Meta intends to lay off staff in the unit of its metaverse-oriented Reality Labs business focused on making custom silicon, Reuters’ Katie Paul wrote, citing two sources familiar with the matter. Workers were informed in a post on the company’s internal discussion forum that they would know about their status with the Facebook parent by early Thursday morning, the author notes.

GRAVY TRAIN SLOWS DOWN: 

TikTok parent ByteDance had an operating profit of nearly $6B in Q1 of 2023, nearly double the haul it made in the same time the previous year, Salvador Rodriguez and Georgia Wells of The Wall Street Journal reported. While the company’s revenue continues to expand, its revenue growth has come down from a year prior, when it rose nearly 80%, the Journal said, citing the company’s financial report shared with employees. ByteDance also offered to buy back shares from current employees at $160 per share, people familiar with the matter told the Journal.

SHAKEUP IN THE EU: 

Meta intends to charge EU users a $14-a-month subscription fee to access Instagram on their phones unless the user allows the company to use personal information for targeted ads, Javier Espinoza and Hannah Murphy of The Financial Times noted. Meta also will charge $17 for Facebook and Instagram together for use on desktop, two people with direct knowledge of the plans told the Times. The changes may take place in the coming weeks.

RESTORING THREADS: 

Instagram is looking to revive interest in Threads by meeting with creators and working to make Threads a place for real-time updates on big events, and more, The Information’s Sylvia Varnham O’Regan said, citing a person with direct knowledge of the situation. While three months ago, Threads announced that 100M people had signed up, usage has since plunged, the report noted.

COLLABORATION: 

Snom Americas announces its strategic collaboration with Zoom surrounding the Snom line of Dect phone systems. The relationship is set to revolutionize the Zoom Phone reseller channel by introducing the Snom M500, a cutting-edge DECT phone system designed for modern business communication needs.

ACKMAN OPEN TO X DEAL: 

Bill Ackman has amassed nearly 800,000 followers on X, the social-media platform formerly known as Twitter (TWTR), by broadcasting his thoughts on topics ranging from how to end the war in Ukraine to Robert F. Kennedy Jr.’s controversial stance on vaccines, The Wall Street Journal’s Cara Lombardo reported. Now, the investor might take his enthusiasm for the Elon Musk-owned platform to the next level, the author added. Ackman’s firm, Pershing Square, received regulatory signoff Friday for a novel investment vehicle whose purpose is to invest in a privately held company and take it public. When asked by The Wall Street Journal if he would consider a transaction with X, the billionaire investor said “Absolutely.”

AI WINNER: 

Mark Zuckerberg’s decision to rename his company Meta Platforms META -1.23% will go down as one of the silliest ideas in American corporate history, Eric J. Savitz wrote in this week’s edition of Barron’s. For investors, every utterance of the word “Meta” is an unpleasant reminder of Zuckerberg’s commitment to the metaverse, a mammoth long shot that’s years from ever paying off. You could see the market’s metaverse disdain playing out in real time this past week during Meta Connect, the company’s annual developer conference, the author says. But the “good stuff” at the conference related to a flurry of new initiatives in generative artificial intelligence software. The announcements showed that the company is thinking creatively about AI as a way to make its platforms more engaging-and eventually more lucrative, the publication adds.

SHARE SALE: 

In a regulatory filing, Meta Platforms disclosed that its General Counsel Jennifer Newstead sold 670 shares of common stock on September 26th in a total transaction size of $199.5K.

SEEKING REGULATORY APPROVAL: 

Google (GOOGL), Apple (AAPL), and Meta Platforms are on the verge of being approved by U.S. regulators to deploy a new set of mobile virtual and augmented reality devices, Todd Sheilds of BNN Bloomberg noted. The low power gadgets would be allowed to tap into airwaves used by Wi-Fi enabled devices under the proposal. Federal Communications Commission Chairwoman Jessica Rosenworcel said that tapping into the 6GHZ band would “foster a new wave of innovation.”

ANALYST COMMENTARY: 

Stifel lowered the firm’s price target on Zoom and kept a Hold rating on the shares after the company kicked off its annual Zoomtopia conference. Zoom’s AI Companion was at the center of attention throughout the day, which was “surprising to none,” and management did not provide financial updates for the quarter or full year during the investor Q&A, the analyst said. However, the company did provide general business updates, including the progress of both Zoom Phone and Zoom Contact Center.

JPMorgan lowered the firm’s price target on Meta Platforms and reiterated an Overweight rating on the shares. The firm remains positive on Meta shares but reduced 2024 and 2025 earnings estimates primarily to account for greater increases to expenses. The biggest change in the firm’s model is increasing 2024 total expenses to $97.5B from $93.4B. It expects Meta to guide to a range of $96B-$102B. While Meta does not typically comment on forward-year revenue in conjunction with its forward-year expense outlook, JPMorgan believes it is important to come away from the Q3 earnings report with a view that revenue can grow faster than expenses.

Truist maintained a Buy rating on Metal, but notes that it remains constructive on the company based on its expectations for a strong growth recovery in Q3 and the prospects for sustained growth heading into Q4. The analyst added that Truist is positive on Meta’s solid showing of what is to come in terms of AI- powered experiences and hardware unveiled at Meta Connect last week.

Loop Capital reaffirmed a Buy rating on Meta Platforms after the first day of its Meta Connect event. The long-term vision is taking shape and the Quest ecosystem continues to expand, even though it still lacks “killer apps” outside of games, and mixed reality with lightweight wearables is a really big deal for the long-term, the analyst told investors in a research note. Meta is the most effective company in the world at distributing technology to mass markets, and gen-AI should be a major engagement driver for the company over time, the firm added.

Morgan Stanley said Meta Connect “showcased impressive tech advancements” in AI to create new use cases and monetization opportunities. However, following the keynote presentations from the event, the firm sees assessing differentiation from other products such as ChatGPT and Bard and monitoring user/developer adoption as “key in gauging potential monetization opportunity,” the firm noted. Morgan Stanley backed an Overweight rating on Meta Platforms shares.

Cantor Fitzgerald analyst Brett Knoblauch raised the firm’s price target on Sprout Social and held a Neutral rating on the shares following the investor day event. Cantor continues to believe shares are fairly valued, but is incrementally more positive on shares given some commentary on ARR growth accelerating, success with larger customers, and Taggar cross-sell opportunities, the analyst told investors in a research note.

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Originally Posted October 4, 2023 – #SocialStocks: Zoom unveils more details on AI Companion at Zoomptopia