#SocialStocks: Trump Media makes purchase to power streaming services

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

PARENTAL CONTROLS: Meta Platforms (META) said in a blog post, “Last year, we introduced parent-managed Meta accounts for families, giving preteens access to a wide range of age-appropriate, engaging, and enriching content in VR and MR. These accounts for preteens require parent approval at setup and provide default protections built specifically for young people ages 10 – 12 (age may vary by region). And we’re excited to share that soon, parents will be able to individually add approved contacts that a 10- to 12-year-old can then chat with, call, and send or accept invites to join them in MR or VR experiences. When we announced Meta Horizon OS, we described the Horizon social layer for people 13+, which includes experiences like chat, calls, and the ability to join others in experiences. Connecting with friends is part of what makes MR and VR great, and we’re excited to give preteens the option to enjoy age-appropriate, social experiences, managed by their parents. Preteens will be able to chat and call directly with parent-approved contacts-as well as seamlessly move between select multiplayer spaces and share experiences with their friends and family. They can be part of the Apollo space missions, trek around Mt. Cook in New Zealand, create their own singing club, or simply play their favorite games.”

ZIONISM: Meta plans to remove more Facebook and Instagram posts that attack “Zionism” or threaten “Zionists” when the term is conflated with Jewish people or Israelis, the company said in a blog post on Tuesday. “We will remove content attacking ‘Zionists’ when it is not explicitly about the political movement, but instead uses antisemitic stereotypes, or threatens other types of harm through intimidation, or violence directed against Jews or Israelis under the guise of attacking Zionists,” Meta wrote. Meta previously considered “Zionism” as a proxy for Jewish people in very narrow or explicit cases, like if Zionists were compared to rats, according to the blog post.

Trump Media (DJT), operator of the social media platform Truth Social, announced that it signed an agreement to acquire assets intended to power TMTG’s planned content distribution network for streaming of linear TV-initially via the Truth Social platform and later through stand-alone apps. Also, the company finalized a long-term equity financing arrangement to fund TMTG’s expansion over the next three years. To advance TV streaming, and contingent on the satisfaction of closing conditions, TMTG expects to receive from Perception Group, Inc. and its affiliates worldwide non-exclusive perpetual licensing rights for the new CDN technology that TMTG plans to use for its content distribution network. Additionally, Perception will face certain restrictions for five years on operating in the U.S. market in areas that may compete with TMTG. The agreement also includes a contingent opportunity for TMTG to purchase Perception outright in the future. TMTG’s streaming service is designed to host news shows and networks, religious channels, and additional family-friendly content that has been cancelled or is at risk of cancellation. The technology acquisition announced will be financed at closing through TMTG’s issuance of up to 5,100,000 shares of its common stock, which shares shall be subject to certain trading restrictions, and $17.5M that are expected to be paid over a period of three years. “TMTG has over $350 million in the bank and the iconic Trump brand. Now, we’ve secured a great deal to guarantee access to additional capital, if necessary, to pursue big strategic opportunities as we look to build out our portfolio by acquiring assets and technologies in the Patriot economy,” the company said.

Additionally, Trump Media filed to sell 38M shares of common stock for holders. The company states: “This prospectus relates to the resale of 37,969,380 shares of common stock of Trump Media & Technology Group Corp. consisting of (i) 37,644,380 shares of the common stock, par value $.0001 per share (the “Shares”), by YA II PN, LTD., a Cayman Islands exempt limited partnership (“Yorkville”), (ii) 200,000 shares of Common Stock to be issued to Yorkville concurrently or within one business day of the filing of this registration statement as consideration for entering into the SEPA (as hereinafter defined) (the “Commitment Shares”) and (iii) 125,000 shares of Common Stock (the “Placement Agent Shares”) issuable to EF Hutton LLC (“EF Hutton”) concurrently or within one business day of the filing of this registration statement, as exclusive placement agent in connection with the transactions contemplated by the SEPA (as defined below). The shares of common stock included in this prospectus consist of Shares that we may, in our discretion, elect to issue and sell to Yorkville, from time to time after the date of this prospectus, pursuant to a standby equity purchase agreement we entered into with Yorkville on July 3, 2024, in which Yorkville has committed to purchase from us, at our direction, up to $2,500,000,000 of Shares, subject to terms and conditions specified in the SEPA. As of the date of this prospectus, we have not issued any Shares to Yorkville.”

DISRUPTED The U.S. Justice Department announced on Tuesday that it thwarted a Russian operation employing artificial intelligence-enhanced fake social media accounts to secretly propagate pro-Kremlin messages across the United States and internationally, according to Andrew Goudsward and Christopher Bing of Reuters. The revelation arrives just four months ahead of the U.S. presidential election, a period security experts reportedly anticipate will witness hacking and covert social media influence campaigns orchestrated by foreign adversaries. Senior U.S. officials have publicly acknowledged vigilance against any schemes aimed at disrupting the electoral process. “With these actions, the Justice Department has disrupted a Russian-government backed, AI-enabled propaganda campaign to use a bot farm to spread disinformation in the United States and abroad,” Attorney General Merrick Garland said in a statement.

ANALYST COMMENTARY: TD Cowen increased the firm’s price target on Meta to $600 from $530 and maintained a Buy rating on the shares. The firm said Meta’s AI-focus is driving revenue growth across the business and so raised revenue estimates given positive engagement trends in Cowen’s 2Q survey data and a solid 2Q ad check.

Piper Sandler lowered the firm’s price target on Zoom Video (ZM) to $68 from $72 and reiterated a Neutral rating on the shares. Following Piper’s latest round of checks for the communication software space, the analyst updated valuations for the space and cutting numbers to reflect the weaker spending environment. The firm cites weaker than expected checks across the space, and concerns around second half of 2024 and 2025 implications for the target cuts.