Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
FACEBOOK UPGRADED TO STRONG BUY: This morning, Raymond James analyst Aaron Kessler upgraded Facebook (FB) to Strong Buy from Outperform with a price target of $270, up from $230. The analyst said he expects Facebook to report revenue and earnings upside in Q4, as his channel checks point to "solid growth." Facebook's guidance for mid-to-high single digit deceleration versus was likely conservative, Kessler noted. In addition, the analyst's recent survey of 465 internet users points to Facebook retaining its social leadership position with Instagram as the biggest share gainer in time spent. Further, he believes moderating privacy concerns could drive multiple expansion for Facebook in 2020. Kessler finds the stock's valuation attractive at current levels.
SURVEY SUGGESTS USER ENGAGEMENT INCREASING: On January 23, Baird analyst Colin Sebastian said his social media survey suggested user engagement appears to be on the upswing for Facebook, Twitter (TWTR), and Snap (SNAP). He said the survey shows use increased across all major platforms perhaps suggesting social networks are at least maintaining share of user time despite growing competition for other forms of digital content. Sebastian said the largest improvement was with Facebook and he reiterated his Outperform rating and $230 price target on the shares.
ITALY BEGINS NON-COMPLIANCE PROCEEDINGS AGAINST FACEBOOK: On January 24, The Italian Competition Authority said that on January 21, 2020, it started non-compliance proceedings against Facebook for failure to comply with ICA's decision of November 29, 2018. In this previous decision, ICA had assessed that Facebook was not adequately informing consumers registering on the social network about the collection and use of their personal data for commercial purposes and, more generally, about the remunerative aims underlying the supply of the service, while at the same time emphasising that it is provided free of charge. Facebook thus carried out an unfair commercial practice, inducing users to make a transactional decision they would have not otherwise made, the authority said. ICA assessed that, regardless of the lack of a monetary consideration, users' personal data acquire the economic value typical of a commercial transaction, as they are used to profile the network's users for commercial and marketing purposes. TAR Lazio confirmed ICA's decision on this point. In addition to imposing a EUR5M fine on Facebook, ICA prohibited further implementation of this practice and required the company to publish an amending statement on the homepage of its website, the Facebook App and the personal page of each Italian registered user. However, although the company removed the "it's free and always will be!" tag line from the home page, consumers willing to register on the social network are still not adequately and immediately informed about the collection and use of their personal data for commercial purposes. It also appears that Facebook did not publish the amending statement, ICA added. The non-compliance proceedings could lead to ICA imposing a fine up to EUR5M on Facebook.
NBC TO PRODUCE TOKYO 2020 OLYMPIC SHOWS FOR SNAPCHAT: On January 23, Variety's Todd Spangler reported that NBC Olympics (CMCSA, CMCSK) will use Snapchat, once again, to present coverage of the XXXII Olympic Summer Games in Tokyo, as well as the U.S. Olympic Team Trials. "Snap is a very influential platform. They have a large and young audience that we want to reach, and we also want to offer our advertisers a way to reach," NBC Olympics president Gary Zenkel said, according to the Variety story.
