Welcome to "#SocialStocks," The Fly’s weekly recap of Wall Street’s reactions to social media stock news.
ADS FOR ADOLESCENTS: In a blog post, Meta Platforms said, "As part of our continued work to keep our apps age-appropriate for teens, we’re making further changes to their ad experiences. We recognize that teens aren’t necessarily as equipped as adults to make decisions about how their online data is used for advertising, particularly when it comes to showing them products available to purchase. For that reason, we’re further restricting the options advertisers have to reach teens, as well as the information we use to show ads to teens. We’re also introducing more teen-specific controls and resources to help them understand how ads work and the reasons why they see certain ads on our apps. These changes reflect research, direct feedback from parents and child developmental experts, UN children’s rights principles and global regulation. Previously, we made changes to how advertisers can reach teens, which included removing the ability for advertisers to target teens based on their interest and activities. We’re announcing further updates to our ad system beginning in February, including removing gender as an option for advertisers to reach teens. Additionally, their engagement on our apps – like following certain Instagram posts or Facebook pages – won’t inform the types of ads they see Age and location will be the only information about a teen that we’ll use to show them ads. Age and location help us continue to ensure teens see ads that are meant for their age and products and services available where they live. Starting in March, teens will have more ways to manage the types of ads they see on Facebook and Instagram with Ad Topic Controls, expanding on what’s already available. Teens will be able to go to their Ad Preferences within Settings on both apps, and choose See Less or No Preference to further control the types of ads they see."
IN ALL FAIRNESS: Roy Austin Jr, VP of Civil Rights and Deputy general counsel at Meta, issued an update that stated in part: "As a part of our settlement with the Department of Justice, or DOJ, representing the US Department of Housing and Urban Development, or HUD, we announced our plan to create the Variance Reduction System, or VRS, to help advance the equitable distribution of ads on Meta technologies. After more than a year of collaboration with the DOJ, we have now launched the VRS in the United States for housing ads. Over the coming year, we will extend its use to U.S. employment and credit ads. Additionally, we discontinued the use of Special Ad Audiences, an additional commitment in the settlement… The VRS builds on our longstanding efforts to help protect against discrimination. This includes restricting certain targeting options for campaigns that advertise housing, employment or credit ads… Across the industry, approaches to algorithmic fairness are still evolving, particularly as it relates to digital advertising. But we know we cannot wait for consensus to make progress in addressing important concerns about the potential for discrimination – especially when it comes to housing, employment, and credit ads, where the enduring effects of historically unequal treatment still have the tendency to shape economic opportunities. We will continue to make this work a priority as we collaborate with stakeholders to support important industry-wide discussions around how to make progress toward more fair and equitable digital advertising."
MUSK SEEKS NEW TRIAL SETTING: Elon Musk is looking to move his upcoming securities-fraud trial involving his conduct running Tesla (TSLA) out of San Francisco, arguing negative publicity and his recent management of Twitter (TWTR) have biased local jurors against him, Patience Haggin of The Wall Street Journal reported. In a Friday court filing, Musk’s attorney’s argued San Francisco’s jury pool has been "exposed to excessive and adverse pretrial publicity concerning Defendant Elon Musk that will deprive him of an impartial jury and his constitutional right to a fair trial," according to the Journal.
THE TRUMP DECISION: Meta is "weeks away" from announcing its decision on reinstating former President Donald Trump, who as recently as last week was still harassing 2020 election workers by name, The Washington Post’s Naomi Nix noted. Trump was suspended indefinitely on January 7, 2021, following his praise and encouragement of rioters who stormed the Capitol. Meta spokesperson Andy Stone said in a statement that the company "will announce a decision in the coming weeks in line with the process we laid out."
BIG TECH LAWSUIT: Seattle’s public school district filed a lawsuit against Big Tech claiming that the companies were responsible for a worsening mental health crisis among students and directly affected the schools’ ability to carry out their educational mission, according to Reuters. The complaint, filed on Friday against Alphabet (GOOGL), Meta Platforms, Snap (SNAP), and TikTok-owner ByteDance with the U.S. District Court, claimed they purposefully designed their products to hook young people to their platforms and were creating a mental health crisis, the publication says.
NO CAMERAS PLEASE: Snap plans to shut down its Camera app for Mac and PC on January 25, according to a message on its support page for Snap Camera. The app, which let users apply face filters while on video calls, launched in October 2018. "You can continue using Lenses on your computer with Snapchat for Web," Snap said.
AXED: Twitter cut approximately 40 advertising employees Wednesday evening, all engineers and data scientists, wrote Erin Woo for The Information. Wednesday night’s layoffs were "at least the third round of cuts since mid-December," and "targeted" areas that management considers to be failing, added The Information story.
ANALYST COMMENTARY: Mizuho analyst James Lee raised the firm’s price target on Meta Platforms to $170 from $160 and maintained a Buy rating on the shares. In 2023, the analyst expects macro trends to remain as key drivers for U.S. and China Internet stocks, "with the divergence between the two expected to widen". In the U.S., high inflation and rising interest rates will likely lead to a deceleration in GDP growth, Lee told investors in a research note. In China, reopening of the economy and a more accommodative monetary policy should lead to higher GDP growth, contends the analyst. He recommends investors to "play defense" in U.S. internet, choosing companies with the lowest risk of downward revisions and aggressive cost-cutting plans. His top U.S. picks are Meta and Uber Technologies (UBER). For China internet, Lee recommends to "play offense," selecting companies that are positioned to gain share and are at the forefront of the recovery curve. His top picks are JD.com (JD), Trip.com (TCOM), and Baidu (BIDU).
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