#SocialStocks: Meta limits ads utilizing Generative AI

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

ON PROTECTION OF MINORS: Google’s (GOOGL) YouTube and ByteDance’s TikTok will be asked by European Union industry chief Thierry Breton to provide information on how the social content platforms comply with new EU online content standards regarding the protection of minors, Reuters reported, citing a person with direct knowledge of the matter.

ELECTION PROTECTION: Meta Platforms (META) said, “As we continue to test new Generative AI ads creation tools in Ads Manager, advertisers running campaigns that qualify as ads for Housing, Employment or Credit or Social Issues, Elections, or Politics, or related to Health, Pharmaceuticals or Financial Services aren’t currently permitted to use these Generative AI features. We believe this approach will allow us to better understand potential risks and build the right safeguards for the use of Generative AI in ads that relate to potentially sensitive topics in regulated industries.”

SHARE REPURCHASE: China’s ByteDance, the company behind TikTok, has initiated a plan to repurchase shares from its international employees at a cost of $160 each, according to Echo Wang of Reuters, citing an insider. This move has been officially confirmed by the company. The share repurchase price matches the one extended to both current and former employees based in the United States last October, which indicated that ByteDance was seeking to acquire at least $300M worth of shares at the rate of $160 per share.

LIKE AND SUBSCRIBE: Meta announced on Monday that there are now 1M active subscriptions to Instagram creators, just over a year after launching the subscriptions feature, and unveiled new creator tools.

BEST OF THE BUNCH: Technology stocks have gotten hit – but not all of them equally. It’s time to take a look at Meta Platforms, Jacob Sonenshine wrote in this week’s edition of Barron’s. Meta’s stock is down just 0.1% since earnings and has recovered more than half of its post-release loss. It’s down only 5% from its 52-week high, better than the other members of the Big Seven except Microsoft (MSFT). What’s more, the stock held price support at $275 and looks to be heading higher, the author says, adding that Meta’s business remains strong and is continuing to grow.

EARNINGS RECAP: Sprout Social (SPT) had a beat and raises third quarter. Annual recurring revenue was $359.5M, up 33% compared to the third quarter of 2022. CEO Justyn Howard says: “We’re pleased to share incredibly strong third quarter results. We’re building an enduring software company centered on amazing products, amazing people and overdelivering for our customers every day. Our fantastic business results and outlook reflect strong execution against these goals.” Piper Sandler raised the firm’s price target on Sprout Social to $62 from $56 and keeps an Overweight rating on the shares. Sprout Social reported Q3 results with ARR nearly $10M above the previously announced $350M+ disclosure, the analyst noted.

SHARE SALE: The CFO of Zoom Video (ZM), Kelly Steckelberg, disclosed the sale of 10,960 shares of company stock at $59.73 per share on October 30, for a total transaction amount of $654,657.

ANALYST COMMENTARY: Barclays lowered the firm’s price target on Sprout Social to $59 from $62 and reiterated an Overweight rating on the shares following the earnings report.

Loop Capital raised the firm’s price target on Pinterest to $39 from $37 and backed a Buy rating on the shares. The company’s Q3 results and Q4 outlook were a strong step forward with revenue growth acceleration and strong momentum on profitability, the analyst tells investors in a research note. The company appears to be making good strides forward on longer-term priorities with a material revenue catalyst with Amazon and a positive event path with other partners expected, the firm added.