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#SocialStocks: Musk Refutes Veracity Of WSJ Story That He Seeks $3B In Funding

Posted January 26, 2023 at 3:15 pm
Andrew Perez
The Fly

Missouri senator introduces bill to ban TikTok, Google fined by DOJ 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.


Tesla (TSLA) CEO Elon Musk has been exploring using as much as $3B in potential new fundraising to help repay some of the $13B in debt related to his buyout of Twitter (TWTR), Berber Jin and Alexander Saeedy of Wall Street Journal reported, citing people familiar with the matter. In December, Musk’s representatives discussed selling up to $3B in new Twitter shares, people familiar with the matter told the Journal. The state of the fundraising talks couldn’t be learned, the journalists add. However, when asked via Twitter if a the story that he is exploring raising up to $3B to pay off Twitter debt, Elon Musk replied “no” without further explanation.


Integral Ad Science and Twitter announced the launch of third-party brand safety and suitability measurement on Twitter in the U.S. With Tweet-level analysis, advertisers can better understand the content that appears adjacent to their ads on Twitter’s feed, the companies said. This advancement now provides Twitter advertisers with reporting that is aligned with Global Alliance for Responsible Media brand safety and suitability risk categories. For broader analytics, advertisers can access campaign-level reporting for overall metrics.


Missouri Republican Senator Josh Hawley announced on Tuesday that he would introduce a bill seeking to implement a nationwide ban on the social media app TikTok, reported Fox Business. “[TikTok] is China’s backdoor into Americans’ lives. It threatens our children’s privacy as well as their mental health,” Hawley tweeted Tuesday morning. “Last month Congress banned it on all government devices. Now I will introduce legislation to ban it nationwide.”


Twitter is being sued over alleged unpaid rent at its headquarters building in San Francisco, Alexa Course of The WSJ reported. SRI Nine Market is the landlord and claims Twitter failed to pay a $3.4M rent payment for December as well as a similarly sized payment for January. In the complaint filed in San Francisco Superior Court, SRI Nine Market drew on Twitter’s letter of credit to try to cover the missed payments, but $3.16M is still owed. The landlord is seeking payment for the unpaid rent as well as other damages, the Journal said, citing the legal filing.


The Justice Department, along with the Attorneys General of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee, and Virginia, filed a civil antitrust suit against Google (GOOG, GOOGL) for monopolizing multiple digital advertising technology products in violation of Sections 1 and 2 of the Sherman Act. Filed in the U.S. District Court for the Eastern District of Virginia, the complaint alleges that Google monopolizes key digital advertising technologies, collectively referred to as the “ad tech stack,” that website publishers depend on to sell ads and that advertisers rely on to buy ads and reach potential customers. Website publishers use ad tech tools to generate advertising revenue that supports the creation and maintenance of a vibrant open web, providing the public with unprecedented access to ideas, artistic expression, information, goods, and services. Through this monopolization lawsuit, the Justice Department and state Attorneys General seek to restore competition in these important markets and obtain equitable and monetary relief on behalf of the American public.

As alleged in the complaint, over the past 15 years, Google has engaged in a course of anticompetitive and exclusionary conduct that consisted of neutralizing or eliminating ad tech competitors through acquisitions; wielding its dominance across digital advertising markets to force more publishers and advertisers to use its products; and thwarting the ability to use competing products. In doing so, Google cemented its dominance in tools relied on by website publishers and online advertisers, as well as the digital advertising exchange that runs ad auctions.

“Today’s complaint alleges that Google has used anticompetitive, exclusionary, and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” said Attorney General Merrick B. Garland. “No matter the industry and no matter the company, the Justice Department will vigorously enforce our antitrust laws to protect consumers, safeguard competition, and ensure economic fairness and opportunity for all.”

Dan Taylor, vice president of Global Ads at Google, said in a blog post that the lawsuit from the Department of Justice over the company’s advertising business “attempts to pick winners and losers in the highly competitive advertising technology sector.” “It largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court,” Taylor said. “DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees and make it harder for thousands of small businesses and publishers to grow. We’ve already responded in detail to many similar claims made in the complaint led by the Texas Attorney General. The lawsuit tries to rewrite history at the expense of publishers, advertisers and internet users. DOJ is demanding that we unwind two acquisitions that were reviewed by U.S. regulators 12 years ago (AdMeld) and 15 years ago (DoubleClick). In seeking to reverse these two acquisitions, DOJ is attempting to rewrite history at the expense of publishers, advertisers and internet users. Both of these acquisitions enabled us to invest heavily in developing new and innovative advertising technologies. These deals were reviewed by regulators, including by DOJ, and allowed to proceed. Since then, competition in this sector has only increased. Government shouldn’t pick winners and losers in a competitive industry. We are one of hundreds of companies that enable the placement of ads across the Internet. And it’s been well reported that competition is increasing as more and more companies enter and invest in building their advertising businesses.” Later in the blog post, Taylor said that Google’s products “expand choice for publishers and advertisers” and that the lawsuit “would reverse years of innovation, harming the broader advertising sector.”


Apple’s (AAPL) mixed-reality headset – due later this year under the likely name of Reality Pro – is an attempt to create a 3D version of the iPhone’s operating system, with eye- and hand-tracking systems that could set the technology apart from rival products, Bloomberg’s Mark Gurman said. Like Meta Platform’s (META) latest headset, Apple’s device will use both virtual and augmented reality. The headset will have two ultra-high-resolution displays – developed with Sony (SONY) – to handle the VR and a collection of external cameras to enable an AR “pass-through mode,” the author noted. Immersive video watching will be a core feature of the new device. Apple has discussed developing VR content for the platform with about half a dozen media partners, including Disney (DIS) and Dolby Laboratories (DLB), the publication added.

In a separate announcement, Meta announced that it is expanding its partnership with the NBA and WNBA as the league’s official VR headset, bringing professional basketball in VR to a new level.


Sprout Social (SPT) announced the acquisition of Repustate, an innovative sentiment analysis and natural language processing company. Through this acquisition, Sprout will increase the power, breadth and automation of social listening, messaging and customer care capabilities with added sentiment analysis, natural language processing and artificial-intelligence.


The Data Protection Commission announced the conclusion of an inquiry into the processing carried out by WhatsApp Ireland Limited in connection with the delivery of its WhatsApp service, in which it has fined WhatsApp Ireland EUR 5.5M for breaches of the GDPR relating to its service. WhatsApp Ireland has also been directed to bring its data processing operations into compliance within a period of six months. The inquiry concerned a complaint made on May 25, 2018 by a German data subject about the WhatsApp service.


In a tweet, musk said, “Far too much power is concentrated in the hands of “shareholder services” companies like ISS and Glass Lewis, because so much of the market is passive/index funds, which outsource shareholder voting decisions to them. ISS and Glass Lewis effectively control the stock market.”


MKM Partners analyst Catharine Trebnick downgraded Zoom Video (ZM). The analyst states that her bullish thesis had been based on expectations of post-pandemic normalized growth of 10%, transition to enterprise growth from online, international expansion, and adjacent product growth in Phone, Chat, IQ, Contact Center, Rooms, Events, and Whiteboard products. Trebnick adds however that given the macro pressures on the Enterprise business, she sees limited upside on Meetings because of the market saturation of video-paid seats and low net new logo adds.

MKM Partners analyst Rohit Kulkarni downgraded Pinterest (PINS). The stock has risen 52% since late July while consensus estimates for 2023 and 2024 have “steadily declined”, and at current levels, the risk-reward on Pinterest looks “fairly balanced”, the analyst told investors in a research note. Kulkarni further noted that his proprietary ad agency survey results have marginally negative read-throughs for Pinterest as compared to Facebook, Instagram, YouTube and Snap (SNAP), implying a potential market share loss.

Additionally, the analyst raised the firm’s price target on Meta. The analyst is citing data from his first proprietary ad agency survey as buyers appear to have a positive forward outlook on spend in 2023-2024, with YouTube and Instagram expecting to experience the largest increase in budget allocation. Kulkarni adds that the near-term stock trend is likely to be based on how low Meta management goes on the 2023 operating expenditure guide, noting that if the company cuts OpEx by over $2B and CapEx by over $1B, the Street would view this as a positive.

Credit Suisse analyst Stephen Ju raised the price target on Meta Platforms. Automation/AI-driven ROI improvements to be found in product innovations such as Advantage+, and the ramp in marketer traction from Q3 to Q4 2022 form the building blocks of what the firm expects to be gradual improvements to Meta’s revenue dollar growth. Shifting focus to its updated conversations with advertisers, whereas prior checks indicated 5%-7% growth to total online/digital advertising spend for 2023, the latest data points suggest that the higher end of that range is no longer valid while the lower end drops to flat year-over-year, Credit Suisse said.

JPMorgan analyst Doug Anmuth believes the online ad market remained volatile in Q4 and said his checks suggest early holiday ad spending was “solid” compared to low expectations. However, December slowed and lacked the “typical end-of-year budget flush” and marketers are increasingly cautious about their spending in early 2023, Anmuth told investors in his earnings preview note for the group that includes Alphabet, Meta Platforms, Pinterest and Snap. The analyst, who upgraded Meta shares to Overweight in December, said the stock remains one of his top picks for 2023. He believes Meta’s topline should begin to stabilize, but adds that he would need to see greater cost cuts, a significant Metaverse pullback, or revenue growth back into the double-digits to warrant a materially higher price target than his current one.

Originally Posted January 25, 2023 – #SocialStocks: Musk refutes veracity of WSJ story that he seeks $3B in funding

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