Category: FB

FB – Need to Know: Facebook's been one of the strongest FAANGs this year. Here's why it's just been downgraded.

The FAANG grouping of stocks haven’t really had much in common this year, with performance ranging from a 58% surge in Google parent Alphabet
GOOG,
+1.11%
,
to a 2% drop in online retailing giant Amazon
AMZN,
+0.38%
.

Arete Research, an independent research service focusing on the tech sector, said it’s time for a breather in the second-best performer of that group, Facebook
FB,
+1.20%
,
which has surged 32% this year. They downgraded Facebook to neutral from buy and left its price target at $381, or 6% above Friday’s closing price.

The issue is that, while Facebook saw a large 47% jump in impression pricing in the second quarter, the number of ad units grew just 6% — the slowest growth since the fourth quarter of 2017. Google hasn’t had this problem, since it could replace pandemic-related search queries with travel searches. Since revenue growth is driven off impression growth, the Arrete analysts expect Facebook shares to trend sideways the rest of the year.

That problem of impressions won’t last forever, the analysts add. They cite Facebook’s growing presence on e-commerce, which should help boost time spent in 2022. Facebook Chairman and CEO Mark Zuckerberg, on the company’s second-quarter earnings call, explained the company’s desire to create more native commerce experiences across its apps.

“What we found is that when these ads link off site, you often land on a web page that’s not personalized or not optimized or where you have to reenter your payment information, and that’s not a good experience for people, and it doesn’t lead to the best results for businesses either,” said Zuckerberg.

The Arrete analysts say, on an enterprise value-to-EBITDA basis, Facebook is attractively valued, at just 12 times 2022 earnings, versus 26 times 2022 earnings for Twitter
TWTR,
+0.76%

and 16 times for Alphabet.

The buzz

The Kansas City Fed announced the Jackson Hole event will be online only, rather than in person, a sign of the growing difficulties the U.S. encountering from the delta strain of coronavirus. According to a Bloomberg News article, Fed Chair Jerome Powell’s re-appointment is supported by Treasury Secretary Janet Yellen, and that Biden will make his decision around Labor Day.

The economics docket includes flash purchasing managers indexes and existing home sales data. In the eurozone, the composite PMI edged slightly down to 59.5 in August from 60.2 in July, in what still was a strong reading.

Uber Technologies
UBER,
+0.23%

and Lyft
LYFT,
-1.92%

both slumped in premarket trade after a judge ruled a California proposition that classified drivers as contractors instead of employees was unconstitutional.

Pfizer
PFE,
-0.16%

reached a $2.3 billion deal for Trillium Therapeutics
TRIL,
+3.92%
,
with the $18.50-per share offer a more than 200% premium to Friday’s close.

The U.K. Competition and Markets Authority it has launched a merger inquiry into S&P Global’s
SPGI,
+0.82%

plan to buy IHS Markit
INFO,
+0.78%

for $44 billion.

The markets

U.S. stock futures
ES00,
+0.35%

NQ00,
+0.29%

rose to kick off the week. Oil
CL.1,
+2.85%

futures surged, and bitcoin
BTCUSD,
+3.68%

climbed over $50,000.

The Nikkei 225
NIK,
+1.78%

rose nearly 2% to lead gains across Asia, while European stocks enjoyed a smaller advance.

Random reads

China is planning to build 43 new coal-fired power plants.

James Bond actor Daniel Craig says he won’t pass on his millions to his children.

Former President Donald Trump found a way to get his supporters to boo him — by encouraging vaccinations.

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FB – Ethiopia to build local rival to Facebook, other platforms

ADDIS ABABA (Reuters) – Ethiopia has begun developing its own social media platform to rival Facebook, Twitter and Whatsapp, though it does not plan to block the global services, the state communications security agency said on Monday.

3D-printed Facebook and Twitter logos are seen in this picture illustration made in Zenica, Bosnia and Herzegovina on January 26, 2016. REUTERS/Dado Ruvic

Ethiopia has been engulfed since last year in an armed conflict pitting the federal government against the Tigray People’s Liberation Front (TPLF), which controls the Tigray region in the country’s north.

Supporters of both sides have waged a parallel war of words on social media.

The government wants its local platform to “replace” Facebook, Twitter, Whatsapp and Zoom, the director general of the Information Network Security Agency (INSA), Shumete Gizaw, said.

Shumete accused Facebook of deleting posts and user accounts which he said were “disseminating the true reality about Ethiopia”.

International human rights groups have criticized the Ethiopian government for unexplained shutdowns to social media services including Facebook and WhatsApp in the past year. The government has not commented on those shutdowns.

Facebook’s Africa spokesperson, Kezia Anim-Addo, declined to comment on Ethiopia’s plans and did not respond immediately to a query about Shumete’s accusations.

But in June, days before national elections, Facebook said it had removed a network of fake accounts in Ethiopia targeting domestic users which it linked to individuals associated with INSA, which is responsible for monitoring telecommunications and the internet.

Spokespeople for Twitter and Zoom did not immediately reply to comment requests.

Shumete declined to specify a timeline, budget and other details, but told Reuters: “The rationale behind developing technology with local capacity is clear … Why do you think China is using WeChat?”

He said Ethiopia had the local expertise to develop the platforms and would not hire outsiders to help.

Social messaging app WeChat is owned by China-headquartered Tencent Holdings, is widely used in the country, and is considered to be a strong tool by Chinese authorities for monitoring its population.

Shumete also referred Reuters to comments he made on Friday to a local media outlet in which he accused Facebook of blocking users who were “preaching national unity and peace”.

He also told Al-Ain Amharic that authorities were working on the platform to replace Facebook and Twitter, while a trial has already been completed of a platform to replace WhatsApp and Zoom and that platform will soon be operational.

Reporting by Dawit Endeshaw; Writing by Maggie Fick; Editing by Angus MacSwan

FB – Facebook and others doing ‘not nearly enough' to stop COVID misinformation, surgeon general says

U.S. Surgeon General Dr. Vivek Murthy again criticized the role of social media in spreading COVID-19 misinformation Sunday, a day after Facebook Inc. quietly released a delayed report on its top-performing links.

“The speed, scale and sophistication with which [misinformation] is spreading and impacting our health is really unprecedented,” Murthy said Sunday morning during an interview on CNN’s “State of the Union.” “And it’s happening largely, in part, aided and abetted by social-media platforms.”

While acknowledging that some steps have been taken by social-media companies to crack down on the spread of misinformation, Murthy said “it’s not nearly enough.”

“There are people who are superspreaders of misinformation,” he said. “And there are algorithms, still, which continue to serve up more and more misinformation to people who encounter it the first time. These are things that companies can and must change. And I think they have a moral responsibility to do so quickly and transparently.”

Murthy cited an online myth that spurred the Food and Drug Administration to tweet Saturday that people should not use a drug intended for livestock as a treatment or to prevent COVID-19. The drug ivermectin can be toxic to humans, and Murthy said its use highlights “the profound cost of health misinformation.”

Murthy’s comments came hours after a Saturday-night news dump by Facebook
FB,
+1.20%
,
which released its delayed first-quarter “content transparency report.” On Friday, the New York Times reported the findings had been shelved earlier this year after Facebook executives feared it would make the company look bad. Among the Facebook report’s findings: Its most-viewed link between January and March was a news story about a CDC investigation into the death of a doctor who had received the COVID-19 vaccine two weeks earlier, and that the Epoch Times, a newspaper that has spread right-wing conspiracy theories, was the 19th-most popular Facebook page in the first quarter.

While the news story about the doctor was legitimate, some questioned why an article that cast doubt on the safety of the vaccine and was promoted heavily by anti-vaccine groups was distributed so widely by Facebook’s algorithm.

Facebook had released its second-quarter content transparency report last week. That too, drew criticism.

In a Medium blog post, Brian Boland, Facebook’s former vice president of product marketing, sharply criticized Facebook’s report, calling the data released “generally useless” and saying “this entire effort is a PR stunt.”

FB – Feds Hit Facebook With Amended Antitrust Suit After First One Tossed

The Federal Trade Commission on Thursday filed an amended complaint against Facebook in a reboot of an earlier lawsuit charging the world’s largest social media platform of using anti-competitive tactics “that helped cement its monopoly.”

The amended complaint was filed in the U.S. District Court for the District of Columbia. That court tossed out the FTC’s antitrust lawsuit in June, finding the government failed to establish the tech platform had a monopoly on social media networks. At the time, Judge James E. Boasberg left open the possibility the government could revive the case by amending its complaint, which sought to break up Facebook citing its acquisitions of Instagram and WhatsApp.

The amended complaint now includes additional data and evidence to support the FTC’s contention that “Facebook is a monopolist that abused its excessive market power to eliminate threats to its dominance” by employing a buy-or-bury scheme against rival companies “when their popularity became an existential threat.”

“Facebook lacked the business acumen and technical talent to survive the transition to mobile. After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat,” said Holly Vedova, FTC Bureau of Competition Acting Director. “This conduct is no less anticompetitive than if Facebook had bribed emerging app competitors not to compete. The antitrust laws were enacted to prevent precisely this type of illegal activity by monopolists. Facebook’s actions have suppressed innovation and product quality improvements. And they have degraded the social network experience, subjecting users to lower levels of privacy and data protections and more intrusive ads. The FTC’s action today seeks to put an end to this illegal activity and restore competition for the benefit of Americans and honest businesses alike.”

Watch on Deadline

The new filing (read it here) pointed to the emergence of mobile platforms as a “critical transition period” in Facebook’s history. Citing “significant failures” on its part in that transition, “Facebook’s executives addressed this existential threat by buying up the new mobile innovators, including its rival Instagram in 2012 and mobile messaging app WhatsApp in 2014, who had succeeded where Facebook had failed.”

The social media giant “supplemented this anticompetitive acquisition strategy with anticompetitive conditional dealing policies, designed to erect or maintain entry barriers and to neutralize perceived competitive threats,” according to the complaint. It also claimed Facebook engaged in a “bait and switch” with developers by opening its platform to them, then limiting their ability to interoperate, insulating itself from competition that “could have forced Facebook to improve its own products and services,” the FTC said.

The FTC voted 3-2 to file the amended complaint.

“It is unfortunate that despite the court’s dismissal of the complaint and conclusion that it lacked the basis for a claim, the FTC has chosen to continue this meritless lawsuit,” Facebook responded today. “There was no valid claim that Facebook was a monopolist — and that has not changed. Our acquisitions of Instagram and WhatsApp were reviewed and cleared many years ago, and our platform policies were lawful.

“The FTC’s claims are an effort to rewrite antitrust laws and upend settled expectations of merger review, declaring to the business community that no sale is ever final. We fight to win people’s time and attention every day, and we will continue vigorously defending our company.”

FB – Facebook may have to sell gif creator Giphy after UK investigation

Facebook Inc (NASDAQ:FB) may be forced to sell gif creator Giphy after an investigation by the Competition and Markets Authority (CMA).

The social media group bought Giphy, which supplies images to Snapchat and Twitter, last year for US$400mln (£290mln).

READ: Facebook flags progress on ‘metaverse’ as sales slowdown eyed in second half

However, the CMA has “provisionally found” that the deal “will negatively impact competition between social media platforms”.

Because millions of people use gifs on social media regularly, a reduction of their choice and quality “could significantly affect how people use these sites and whether or not they switch to a different platform, such as Facebook”.

Social media platforms have “very little choice” because there is only one other large provider of gifs, namely Google’s Tenor.

“The CMA provisionally found that Facebook’s ownership of Giphy could lead it to deny other platforms access to its GIFs,” the watchdog said.

“Alternatively, it could change the terms of this access – for example, Facebook could require Giphy customers, such as TikTok, Twitter and Snapchat, to provide more user data in order to access Giphy GIFs. Such actions could increase Facebook’s market power, which is already significant.”

According to the investigation, Facebook’s platforms – Facebook, WhatsApp, and Instagram – account for over 70% of the time people spend on social media and are accessed at least once a month by 80% of all internet users.

Before the merger, Giphy offered paid advertising by allowing companies to promote their brands through gifs.

The firm was thinking of expanding this service beyond the US, which would have been “a new player into the advertising market and a potential challenger to Facebook” in the UK, the CMA said.

“It would also have encouraged greater innovation from others in the market, including social media sites and advertisers. However, Facebook terminated Giphy’s paid advertising partnerships following the deal, meaning an important source of potential competition has been lost,” it added.

“This is particularly concerning given Facebook’s existing market power in display advertising – as part of its assessment, the CMA found that Facebook had a share of around 50% of the £5.5bn display advertising market in the UK.”

Shares were flat at US$361.82 in premarket trading.

FB – Facebook pushes its office reopening to 2022

“Data, not dates, is what drives our approach for returning to the office,” Facebook (FB) spokesperson Chloe Meyere said in a statement. “Given the recent health data showing rising Covid cases based on the Delta variant, our teams in the US will not be required to go back to the office until January 2022.”
The new reopening date will apply to “some countries outside of the US, as well,” Meyere added.
Many of the tech industry’s biggest companies, which were among the first to shut down their offices at the start of the pandemic last year, had set September as the target to reopen. Now these companies are delaying those plans as concerns about the Delta variant increase and in some cases they’re requiring vaccinations for employees who are returning.
Facebook’s decision comes days after Amazon (AMZN) announced it would not bring its corporate workers back to the office until Jan 3, 2022. Ride-hailing firm Lyft (LYFT) has delayed its reopening even further, until Feb 2. Others including Google (GOOGL), Apple (AAPL), Uber (UBER) and Microsoft (MSFT), have adopted more of a wait-and-see approach, delaying their planned September reopenings until October.

FB – Facebook delays return to office for employees until January

Facebook said on Thursday it has pushed back its office return date for all U.S. and some international employees until January due to concerns over the highly infectious Delta variant.

“Given the recent health data showing rising COVID cases based on the Delta variant, our teams in the U.S. will not be required to go back to the office until January 2022,” the company said.

The company also added that it is monitoring the situation and working with experts to prioritize the safety of all its employees before they return to the office.

Companies across the United States have tightened their defenses against the virus. Last month, big technology companies including Facebook as well as Google asked U.S. employees to get vaccinated to step into offices, while Twitter said it was shutting its reopened offices in the country.

Amazon has also ordered all U.S. employees to wear a mask at work regardless of their vaccination status.

FB – Why Facebook Ditched Its Mind-Reading Neural Interface

A neuroscience team at Facebook (NASDAQ:FB) recently restored a stroke victim’s ability to speak using a brain-computer interface headset. The person simply attempted to speak, and the interface translated the brain’s intentions into words — for the first time in history. Shortly after the research concluded, Facebook announced in a press release that the team is refocusing its efforts away from the technology, but it will open-source the software and hardware for outside development.

Now, Facebook’s neuroscientists are shifting their attention to wrist-based neural interfaces (in other words, a bracelet that can read your nerve signals) for use in VR and AR. Even if there is a shorter path to market for a wrist-wearable neural interface than a headset, convincing consumers to actually buy the product from Facebook in particular will be a challenge. But the company can’t fulfill its metaverse vision without bringing wearable interfaces to mass market.

A woman presents on stage, with graphics behind her on screen. The graphics are of cartoon humans wearing VR headsets.

Image source: Facebook.

Wearables are a piece of Facebook’s metaverse puzzle

Facebook’s vision for the metaverse consists of interactive, shared digital worlds and can be thought of as an “embodied internet.” Facebook is such a big believer that it aims to be known as a metaverse company in the long run, not a social network, according to a Verge interview of Mark Zuckerberg.  

Andrew Bosworth, Facebook’s vice president of AR and VR, announced in a Facebook post that the company will form a new executive team dedicated to building the metaverse. According to Bosworth, before it can fulfill its metaverse vision, Facebook needs to “build the connective tissue” between the digital and physical worlds in order to remove the limitations of physics and move through the digital worlds with ease. 

Facebook clearly plans for this connective tissue to be wearable interfaces, whether on the head, wrist, or otherwise — in the company’s press release regarding its refocused priorities in neural interface development, it specified that its wrist-based interfaces are intended to be used for intuitive AR/VR input. Therefore, while the company’s brain-computer interface was developed with a long-term mindset, its wrist-based interface is being built directly for the consumer.

Facebook’s single barrier to success in the metaverse: Trust

Facebook is ahead of the game in AR/VR tech, and its development of wearable neural interfaces is nothing short of cutting edge. That doesn’t necessarily mean consumers are ready to open their wallets and put a Facebook machine on their heads.

In Business Insider‘s most recent Digital Trust Survey, Facebook ranked last place among the nine largest U.S. social media platforms in perceived digital data privacy. Even more discouraging for Facebook’s metaverse aspirations was a more specific recent survey of over 2,000 U.S. adults by Morning Brew and Harris Poll, which found that consumers would rather buy AR/VR devices from Apple, Google, Samsung, Amazon, or Microsoft than Facebook. 

Considering this consumer sentiment, taking a brain-machine interface to market is an extremely risky concept for the company — at least for now. The company’s wrist-based interface is a better fit to be used alongside its Oculus VR headsets and possibly even AR glasses (which are currently in development under the name Project Aria) as an introduction to the metaverse. 

How Facebook can get consumers to the metaverse

Facebook is a powerful growth stock with unmatched network effects and cutting-edge technology, making it a solid long-term investment for a number of reasons. That said, all companies have weaknesses. Facebook’s weakness is public image, and this could slow or prevent the company from rolling out the technology it develops. The longer it takes for the public to adopt its metaverse-enabling technology, the easier it will be for big-tech competitors to beat Facebook to the punch.

One way Facebook could navigate negative consumer sentiment in the short term is by leaning into the Oculus brand instead of the Facebook brand for its metaverse-related hardware — this would include, but not be limited to, not requiring a Facebook account login to access the metaverse through its Oculus devices. Brand is important when a product hits the mass market, and many consumers would have an easier time adopting Oculus hardware and interacting with Oculus digital worlds than with the same products from Facebook.

While most tech-savvy investors immediately associate the Oculus brand with Facebook, many consumers would not — a 2019 study by Pew Research revealed that only 29% of Americans could identify that WhatsApp and Instagram are owned by Facebook, several years after the acquisitions were completed. 

In the long term, Facebook must regain public trust the right way — by improving users’ ability to control their data collection settings, educating users about how and why their data is collected, and working to avoid data leaks and unethical data harvesting, like the infamous Cambridge Analytica political scandal, at all costs. Otherwise, its reputation will stand firmly between its metaverse technology and the public.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.