#SocialStocks: Trump Media skyrockets following first day of trading

Welcome to “#SocialStocks,” The Fly’s weekly recap of Wall Street’s reactions to social media stock news.

GOVERNMENT SCRUTINY: The Biden administration is in the process of probing TikTok for “faulty privacy and data security practices,” and may bring a suit or announce a settlement soon, reported Politico’s Josh Sisco, citing people with knowledge of the matter. The Federal Trade Commission is pondering measures against TikTok, and its Beijing-based parent company ByteDance, for misleading “users by denying that individuals in China had access to their data, and also violated a children’s privacy law, according to the people, who were granted anonymity to discuss a confidential matter,” added the Politico story.

FIRST DAY: Digital World Acquisition Corp. (DWAC) and Trump Media & Technology Group, or TMTG, announced the completion of their business combination. Digital World now operates as “Trump Media & Technology Group Corp.” following the successful completion of the business combination. TMTG, as a publicly traded company, will continue to be led by CEO, Devin Nunes, and its existing management team. “As a public company, we will passionately pursue our vision to build a movement to reclaim the Internet from Big Tech censors. We will continue to fulfill our commitment to Americans to serve as a safe harbor for free expression and to stand up to the ever-growing army of speech suppressors. As we mark this milestone, I want to particularly thank Eric Swider for his unflagging dedication to our deal and our cause,” said TMTG CEO Devin Nunes. Trump Media & Technology announced that after completing its business combination with blank check company Digital World Acquisition Corp., trading of TMTG’s common shares began on the Nasdaq stock exchange on Tuesday. At market open, the ticker symbol switched from (DWAC) to (DJT) for the company’s common shares. The stock s0ared 40% to $69.75 on first day of trading. Investors interested in former President Donald Trump’s brand will have a new place to put their money next week now that shareholders have backed a so-called SPAC merger, Matt Peterson writes in this week’s edition of Barron’s. The merger, approved Friday morning, will unite Trump Media & Technology Group and Digital World Acquisition. The finalization of the SPAC, or special purpose acquisition company, was delayed due to legal and accounting concerns. The author named five risks to take into consideration before investing, namely the fact the company is losing money, the new company is playing for conservative attention, Trump is the big draw but he can post elsewhere, Trump’s legal problems could become investor problems, and the new company will be a public listing, but Trump will be in control.

REVISITING BAN: Meta Platform’s (META) Oversight Board is calling on the company to end its blanket ban on the Arabic word “shaheed,” or “martyr,” after a review found Meta’s approach “overbroad,” Reuters’ Katie Paul wrote. The board says Meta should remove posts containing the word “shaheed” only when they are linked to clear signs of violence or if they separately break other Meta rules.

GOING TO NEW LENGTHS: Meta has made “unconventional” moves to attract and keep AI researchers, including CEO Mark Zuckerberg personally writing to DeepMind researchers to recruit them, The Information’s Kalley Huang noted, citing two people who viewed the emails. In addition, the company has made job offers without interviewing candidates and relaxed its longstanding practice of not increasing compensation for employees threatening to leave, Huang writes.

INCREASED DISTRIBUTION: Zoom Video (ZM) announced Zoom Workplace, its AI-powered, open collaboration platform, and introduced new AI Companion expansions to help reimagine teamwork. Zoom’s latest products and features, including new AI Companion features for Zoom Phone and extended capabilities with Ask AI Companion, a refreshed look within the Zoom app, and more, will provide its customers with the all-in-one AI-powered platform they need to power modern work. Zoom also announced customer experience enhancements to Zoom Contact Center, so businesses can strengthen customer relationships and leverage real-time AI-powered insights to improve live agent engagements. “We have seen the positive impact that Zoom AI Companion has had on our business and our customers, transforming how we work by freeing up precious time for collaborative teamwork,” said Smita Hashim, chief product officer at Zoom. “Zoom Workplace with AI Companion will help solve real customer problems by bringing the core collaboration solutions into a single AI-powered platform to help improve productivity, efficiency, and the overall workday, all within the Zoom experience users trust and love.” The company announced that Zoom Workplace is now available in AWS Marketplace (AMZN), a digital catalog with thousands of software listings from independent software vendors. Now customers can purchase Zoom Workplace products — such as Meetings, Team Chat, Phone, Whiteboard, Spaces – as well as Zoom Contact Center and Revenue Accelerator in AWS Marketplace.

DMA INVESTIGATION: The European Commission has opened non-compliance investigations under the Digital Markets Act into Alphabet’s (GOOGL) rules on steering in Google Play and self-preferencing on Google Search, Apple’s (AAPL) rules on steering in the App Store and the choice screen for Safari and Meta’s “pay or consent model”. The Commission said it suspects that the measures put in place by these gatekeepers fall short of effective compliance of their obligations under the DMA. In addition, the Commission said it has launched investigatory steps relating to Apple’s new fee structure for alternative app stores and Amazon’s ranking practices on its marketplace. Finally, the Commission has ordered gatekeepers to retain certain documents to monitor the effective implementation and compliance with their obligations. The Commission has opened proceedings to assess whether the measures implemented by Alphabet and Apple in relation to their obligations pertaining to app stores are in breach of the DMA. The Commission is concerned that Alphabet’s and Apple’s measures may not be fully compliant as they impose various restrictions and limitations. The Commission has opened proceedings against Alphabet, to determine whether Alphabet’s display of Google search results may lead to self-preferencing in relation to Google’s vertical search services over similar rival services. Finally, the Commission has opened proceedings against Meta to investigate whether the recently introduced “pay or consent” model for users in the EU complies with Article 5(2) of the DMA which requires gatekeepers to obtain consent from users when they intend to combine or cross-use their personal data across different core platform services. The Commission intends to conclude the proceedings opened today within 12 months.

PACT: Zoom and Avaya announced a strategic partnership designed to deliver enhanced collaboration experiences to global enterprises. As part of the partnership, Avaya selected Zoom Workplace to integrate with Avaya’s Communication & Collaboration Suite, providing customers with a new, streamlined way to manage their communications environments and workflows. Additionally, Avaya will offer the integrated Zoom Workplace solution and will deliver an enhanced collaboration experience to its base, which boasts some of the industry’s largest enterprise customers.

BUY: Cathie Wood’s ARK Investment bought 90K shares of Meta Platforms last week.

AMICUS BRIEF: Meta, Microsoft (MSFT), Spotify (SPOT), X, and Match Group (MTCH) have filed an amicus brief protesting Apple’s (AAPL) plan to charge a commission for payments made outside the App Store, arguing that Apple’s response essentially leaves in place the existing rule governing how software makers steer users to alternative options and places new restrictions on app developers, The Wall Street Journal’s Aaron Tilley and Bradley Olson reported. The five tech companies join Epic Games in protesting how Apple has complied with a federal court ruling that ordered Apple to allow alternative payment methods.

ANALYST COMMENTARY: Piper Sandler said that recently, the firm has observed multiple new Google ad units on the Pinterest (PINS) app, which caught its attention. Piper has taken a deeper look at the URLs and thinks the ad units are an indication that a Google partnership is potentially being tested in the U.S. Also, a code string “GTHRetarg” suggests the ad units could be Search-related or use audience data to retarget users on Pinterest. Prior to this week, the last time the firm saw any type of Google ad on Pinterest was in February 2023. Pinterest remains Piper’s top Mid-Cap pick. The firm reiterated an Overweight rating on Pinterest’s on the shares with a price target of $48. The stock rose 3% following the observation

KeyBanc initiated coverage of Sprout Social (SPT) with an Overweight rating and $83 price target. The company offers sustainable 20%-plus revenue growth with potential for reacceleration from the Salesforce partnership, Tagger Media, price increase uplift, and movement upmarket, the analyst tells investors in a research note. The firm believes Sprout maintains an attractive competitive position as it dominates the mid-market and upper small business customer cohorts.