StockTok: Trump Media shares in focus following election win, M&A speculation

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

ELECTION 2024: Trump Media (DJT) jumped as much as 42% this morning after Donald Trump was elected President of the United States for the second time.

INTEGRATION: Thumzup Media (TZUP) is nearing completion of developing video capabilities to facilitate its proprietary ad tech platform’s integration with Instagram Reels. “We believe Thumzup’s planned integration with Instagram Reels should significantly accelerate our growth. We have found that many of our advertisers prefer Instagram Reels due to its higher engagement rate. In fact, it is reported that Instagram Reels receive 22% more interaction than standard video posts, and this increased visibility can lead to more in-video purchases. Furthermore, many creators in our community of users have told us they are eager to get paid for posting videos on Instagram about participating advertisers’ products and services,” stated Thumzup Chief Executive Officer Robert Steele. “With an audience of over 726 million unique users, Instagram Reels’ audience is massive and highly engaged. We expect Thumzup’s Instagram Reels integration to be transformative for our community of posters, our advertisers, and for our shareholders.”

EARNINGS RECAP: Trump Media reported third quarter earnings last night surpassing last year’s mark in terms of EPS. The company did fall short of last year’s figure for revenue though. Additionally, the company noted that it is still interested in mergers and acquisitions, specifically calling out the fintech space as potential growth vector. “This has been an extraordinary quarter for the Company, for Truth Social users, and for our legion of retail investors who support our mission to serve as a beachhead for free speech on the Internet,” TMTG CEO Devin Nunes said. “Since announcing our agreement in July 2024 to acquire TV streaming technology, in less than four months, we’ve built our own nationwide TV content distribution network, introduced live TV streaming on the Truth Social platform, and launched our own OTT TV service, Truth+, on the Web and with native apps for iOS, Android, and connected TVs. Even as we continue to enhance the Truth Social site, we’ve expanded our core ecosystem in our effort to make Truth Social a central hub for news, entertainment, and discussion. Additionally, by establishing our proprietary content delivery network and overall tech stack, we are maximizing our independence from Big Tech. These actions are not the end of our expansion but merely the beginning, as TMTG continues to explore additional possibilities for growth such as potential mergers and acquisitions with companies that would benefit from Trump Media technology and branding, including in the realm of fintech.”

Meta Platforms (META) shares fell 3% after last week’s Q3 release, despite the social media giant beating both EPS and revenue expectations. The company also issued Q4 guidance in-line with analyst consensus. Mark Zuckerberg, Meta founder and CEO, said: “We had a good quarter driven by AI progress across our apps and business. We also have strong momentum with Meta AI, Llama adoption, and AI-powered glasses.” IN addition, the company slightly lowered its FY24 expense outlook. Meta said: “We expect full-year 2024 total expenses to be in the range of $96-98 billion, updated from our prior range of $96-99 billion. For Reality Labs, we continue to expect 2024 operating losses to increase meaningfully year-over-year due to our ongoing product development efforts and investments to further scale our ecosystem. We anticipate our full-year 2024 capital expenditures will be in the range of $38-40 billion, updated from our prior range of $37-40 billion. We continue to expect significant capital expenditures growth in 2025. Given this, along with the back-end weighted nature of our 2024 capital expenditures, we expect a significant acceleration in infrastructure expense growth next year as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet. Absent any changes to our tax landscape, we expect our fourth quarter 2024 tax rate to be in the low-teens.” Barclays raised the firm’s price target on Meta to $630 from $550 and reiterated an Overweight rating on the shares following the Q3 report. Meta “seems to have its mojo back,” evidenced by growth well above the digital ad industry, artificial intelligence improving the business, and CEO Mark Zuckerberg “flexing the roadmap with a willingness to bet big,” the analyst tells investors in a research note. While long term tech investors should applaud these efforts, it is “scary at the same time” with Met’s multiple hitting recent highs, contends Barclays. On the other end of the spectrum, Scotiabank lowered its price target on Meta Platforms to $583 from $585 and maintained a Sector Perform rating on the shares. The company reported results in-line with consensus expectations, leading to a “solid but uninspiring” Q3 print, the analyst told investors. The firm is lowering its outlook modestly on margin expectations.

NATIONAL SECURITY APPLICATIONS FOR LLAMA: Meta Platforms announced that it is making Llama available to U.S. government agencies and contractors working on national security applications. Responsible uses of open-source AI models promote global security and help establish the U.S. in the global race for AI leadership, the company said, adding that open-source AI benefits the public sector by enabling discoveries and breakthroughs, driving efficiency and improving delivery of public services. “These kinds of responsible and ethical uses of open-source AI models like Llama will not only support the prosperity and security of the United States, they will also help establish U.S. open-source standards in the global race for AI leadership,” said Nick Clegg, president of global affairs.

POLITICAL AD BAN EXTENDED: Meta is extending its ban on new political ads on Facebook and Instagram past Election Day in the U.S., “until later this week,” Meta said in an update, extending its ban on the ads past Tuesday, the original end date for the restriction period. “As a reminder, ads that have run prior to 12:01 AM PT on October 29, 2024 and served at least one impression will be allowed to continue while the restriction period is in effect with limited editing capabilities,” Meta said.

UNBEELIEVABLE: Meta’s plans to build a U.S. nuclear-powered AI data center were thwarted in part after a rare bee species was found on land earmarked for the project, The Financial Times’ Hannah Murphy and Cristina Criddle reported. According to people familiar with the matter, CEO Mark Zuckerberg planned to strike a deal with an existing nuclear power plant operator to provide emissions-free electricity for a new data center, but the potential deal faced multiple complications including environmental and regulatory challenges. Rivals Amazon (AMZN), Google (GOOGL), and Microsoft (MSFT), have all struck deals recently with nuclear power plant operators to fulfill rising energy demands from data centers, the report noted. Meta continues to explore various deals for carbon-free energy, including nuclear, one of the people said.

POTENTIAL SMART GLASSES RIVAL: Apple (AAPL) is weighing a push into smart glasses with an internal study of products currently available, in a move that follows Meta (META) into an increasingly popular space, Bloomberg’s Mark Gurman wrote. The initiative, known internally as Atlas, began last week and involves collecting feedback from Apple staff on smart glasses, the author said, citing people with knowledge of the matter

MAUS: Adam Mosseri, the Meta executive overseeing Threads and Instagram, said that Threads crossed 275M monthly active users on Sunday. “A big thank you to everyone who’s helped us get this far,” Mosseri said in a post on Threads. “There’s a lot more to do, and plenty of things to fix, but there’s something exciting about this place.”

M&A SPECULATION: The massive run up in shares of Trump Media has “been described by me and others as a meme-induced phenomenon,” wrote Charles Gasparino, who added that “On The Money has learned that there might be a better reason why some traders are buying – and maybe holding – the stock even if Trump loses on Tuesday.” The report claims that “people inside the Trump camp have been speculating for weeks now that Truth Social will at some point, maybe sooner rather than later, get subsumed by the mega-MAGA supporting Elon Musk, and his own social media platform X, formerly known as Twitter,” but goes on to add: “Full disclosure: I have not confirmed that speculation with anyone in a position to make the deal happen – neither Musk nor Trump himself”.

BUY AND SELL: Cathie Wood’s ARK Investment bought 34.1K shares of Meta Platforms on Thursday last week. Separately, in a regulatory filing, Meta CLO Jennifer Newstead disclosed the sale of 905 class A common shares of the company on October 29 at a price of $580.10 per share.

POWER PURCHASE AGREEMENT: Engie North America (ENGIY) and Meta announced they recently completed an environmental attributes purchase agreement for Engie to supply 260 MW of renewable energy and associated environmental attributes from its Sypert Branch solar project in Milam County Texas to support Meta’s growing power needs in line with its net zero goals. Meta will purchase 100% of the 260 MW facility’s output which is expected to commence operation in late 2025. Sypert Branch solar project was developed by Engie, who will also construct and operate the project located 70 miles northeast of Austin, Texas, and approximately 10 miles from Meta’s data center in Temple, Texas. The 260 MW from Sypert Branch will add to the more than 12 GW of renewable energy procurement already announced by Meta. The Sypert Branch project is expected to employ over 300 workers during construction, many of them local to the region and generate more than $69M in tax revenues to support the local community over the life of the project. This includes some $45M specifically for two local school districts. Once operational it will add to the existing Engie portfolio of around 8 GW of renewable projects including solar, wind and battery storage in operation or construction across North America.

ADDITIONAL ANALYST COMMENTARY: Loop Capital elevated the firm’s price target on Snap (SNAP) to $16 from $14 and kept a Buy rating on the shares. The recovery in Snap’s performance advertising business continues to make progress but has taken longer than expected and brand advertising remains weak, the analyst noted. Snap’s Mobile gaming and other app-based advertisers are also set to provide another leg to the recovery in Direct Response. which continues to progress, the firm added.

Wells Fargo decreased its price target on Meta to $641 from $652 and reaffirmed an Overweight rating on the shares. The firm has increased conviction in its above-consensus 2025 revenue growth estimate following the solid Q3 print and strong guidance, the analyst said. Management’s posture suggests a team willing and able to play offense, the firm added.

Seaport Research boosted the firm’s price target on Meta Platforms to $675 from $555 and backed a Buy rating on the shares. The firm remains positive on the stock given its expectation for continued solid ad growth, engagement strength, and option value with AI investments, the analyst told investors.