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#SocialStocks: Republican Lawmakers Investigate Heads Of Twitter, Meta

Posted December 15, 2022 at 2:47 pm
Andrew Perez
The Fly

New bipartisan legislation calls for TikTok ban, Instagram introduces Notes 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.

REPUBLICANS INVESTIGATE COLLUSION: 

House Oversight Republicans are calling for more information from Twitter (TWTR) CEO Elon Musk and Meta Platforms (META) CEO Mark Zuckerberg  as they investigate whether Biden administration officials helped social media companies censor free speech on their platforms, Kelly Laco of Fox News reported. The lawmakers on sent letters, first obtained by Fox News Digital, to the heads of Twitter and Facebook. Republicans allege that the Biden administration colluded with the Big Tech companies under the “guise” of suppressing “misinformation” in order to censor Americans. “Committee Republicans continue to investigate whether U.S. government officials have participated in suppression and censorship of lawful speech in violation of the U.S. Constitution. Reports continue to surface that social media companies acted on behest of government agencies and officials when removing, restricting, or disclaiming content,” they wrote.

FAVORITE CHILD: 

Tesla (TSLA) investors are voicing concerns over Elon Musk’s focus on Twitter, which he also owns, The Wall Street Journal’s Meghan Bobrowsky reported. “There is no TSLA CEO today,” Gary Black, managing partner of the Future Fund LLC, which owns roughly $50M worth of Tesla, tweeted Monday. Tesla shares fell more than 6% in Monday trading after Musk took aim on Twitter over the weekend at the company’s former head of trust and safety, calling for the prosecution of top U.S. government medical adviser Anthony Fauci, and criticizing people who offer their pronouns without being asked. Ross Gerber, a longtime backer of Tesla, on Monday tweeted a question directed at Tesla’s board of directors: “Who is running tesla day to day during this critical time for the company.”

Elon Musk’s bankers are considering replacing some of the high-interest debt he layered on Twitter with new margin loans backed by Tesla stock that he’d be personally responsible for re-paying, Bloomberg’s Davide Scigliuzzo, Sonali Basak, and Paula Seligson reported, citing people familiar with the matter. The margin loans are one of several options the Morgan Stanley (MS)-led bank group and Musk’s advisers have discussed to soften the burden of the $13 billion of debt that Musk used to purchase the social media company in October, the people said.

RENT FREE: 

As Musk prepares his recently acquired social media platform Twitter for some legal wrangling, he is reconstituting his legal team and has “pushed out one of his closest advisers in the process,” wrote Ryan Mac, Mike Isaac and Kate Conger for the NY Times. According to the NY Times’ story, Twitter has not paid rent at any global offices for weeks and has not paid the tab for recent charter flights in “anticipation of potential litigation.”

THE CASE AGAINST TIKTOK: 

U.S. Senator Marco Rubio and U.S. Representatives Mike Gallagher said, in part: “TikTok’s Chinese parent company, ByteDance, is required by Chinese law to make the app’s data available to the Chinese Communist Party . From the FBI Director to FCC Commissioners to cybersecurity experts, everyone has made clear the risk of TikTok being used to spy on Americans. U.S. Senator Marco Rubio R-FL introduced bipartisan legislation to ban TikTok from operating in the United States. The Averting the National Threat of Internet Surveillance, Oppressive Censorship and Influence, and Algorithmic Learning by the Chinese Communist Party Act would protect Americans by blocking and prohibiting all transactions from any social media company in, or under the influence of, China, Russia, and several other foreign countries of concern. U.S. Representatives Mike Gallagher R-WI and Raja Krishnamoorthi D-IL introduced companion legislation in the U.S. House of Representatives.”The federal government has yet to take a single meaningful action to protect American users from the threat of TikTok. This isn’t about creative videos – this is about an app that is collecting data on tens of millions of American children and adults every day.”

The State of Indiana sued social media platform TikTok on Wednesday, for deception of consumers with its claims on content and data security and said the platform should be barred from “allowing children to access adult content, including about sex, profanity and drugs,” reported Erin Mulvaney for the Wall Street Journal. In the “first of their kind” lawsuit, Indiana cites studies that show extreme use of the platform may be linked to to “mental disorders among teenagers, including eating disorders,” added the WSJ story.

MORE THAN PICTURES: 

Instagram blogged earlier, in part: “Whether it’s catching up with friends or exploring shared interests, connecting with others is why people come to Instagram.. we’re introducing several updates to help you feel closer to the people you care about. We’re beginning to roll out Notes, a new way to share your thoughts and see what your friends are up to. Notes are short posts of up to 60 characters using just text and emojis. To leave a note, go to the top of your inbox, select the followers you follow back or people on your Close Friends list, and your note will appear at the top of their inbox for 24 hours. Replies to notes will arrive as DMs in your inbox…People enjoy sharing throughout their day to Stories – from highlights to the more everyday moments. We’re testing new features in Stories to help people more easily share in spontaneous, fun ways to help create even stronger connections with friends.

BLUE FOR BUSINESS: 

In a help Center blog entry, the company said, in part. “Twitter applies visual identity signals like labels and badges on account profiles to provide more context about – and help distinguish – different types of accounts…The blue checkmark may mean two different things: either that an account was verified under Twitter’s previous verification criteria (active, notable, and authentic), or that the account has an active subscription to Twitter’s new Twitter Blue subscription product, which was made available on iOS on November 9…The gold checkmark indicates that the account is an official business account through Twitter Blue for Business…The Official profile label is applied to government accounts (institutional accounts, elected or appointed officials, and multilateral organizations)*, certain political organizations such as political parties, commercial companies including business partners, major brands, media outlets and publishers, and some other public figures…Candidate labels contain additional information about Twitter accounts for official national-level political candidates for some elections. The label appears on the Profile of the candidate’s Twitter account and on the Tweets sent and Retweeted by the candidate’s account.”

REINTEGRATION: 

The assets of the former Facebook’s “Connectivity” division, which included the social media giant’s experimental internet and telecoms efforts, including satellites as well as drones to apps and other more traditional infrastructure have been “quietly” reintegrated into Meta, wrote Devin Coldewey for Tech Crunch . According to the TC story, “Meta has been working with the Telecom Infra Project to build new software, hardware and standards that make telecommunications networks more accessible and maintainable.”

TRACKING MUSK’S TWEETS: 

Twitter CEO Elon Musk has taken to Twitter often to provide background to news and events happening within his new company. Some tweets from this week are as follows: 

  • In a quote tweet regarding the latest Twitter Files, a series containing thousands of internal documents obtained by sources at Twitter, Musk said, “Under pressure from hundreds of activist employees, Twitter deplatforms Trump, a sitting US President, even though they themselves acknowledge that he didn’t violate the rules:”
  • “Cool, the bots are so far unable to swarm to the top of my replies!”
  • “Twitter is speeding up”
  • “The bots are in for a surprise tomorrow”
  • “Twitter is both a social media company and a crime scene”
  • “If the Fed raises rates again next week, the recession will be greatly amplified”
  • “Twitter will soon start freeing the name space of 1.5 billion accounts”
  • “Twitter is working on a software update that will show your true account status, so you know clearly if you’ve been shadowbanned, the reason why and how to appeal”

ANALYST COMMENTARY: 

Piper Sandler analyst Thomas Champion upgraded Pinterest to Overweight from Neutral. The analyst sees “multiple tailwinds” for the company into 2023 after his advertising buyer survey pointed to an improved ad product and rising market rising. The data points to better monthly active user trends for Pinterest, says Champion, who also sees a path to margin expansion ahead. “We like the new leadership, investor activism, and we see a buyback coming,” Champion writes. He believes the lows are likely already in the shares.

Citi analyst Tyler Radke raised the firm’s price target on DocuSign (DOCU and maintained a Buy rating on the shares. The company’s Q3 results offered encouraging signs of growth stabilization and improving margins, Radke tells investors in a research note. The in-line Q4 guidance and fiscal 2024 outlook below Street estimates “suggests lower confidence but de-risks numbers,” says the analyst. Radke opened a work-from-home pair-trade of long DocuSign, short Zoom Video (ZM) as he sees the former outperforming with stronger underlying growth and leading indicators, lower competitive risk, and “de-risked” 2024 numbers.

Originally Posted December 14, 2022 – #SocialStocks: Republican lawmakers investigate heads of Twitter, Meta

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