After Wednesday’s congressional meeting with CEOs from Twitter, Facebook, and Alphabet over Section 230—a federal law that protects social media companies from being held responsible for the content of users’ posts. Whether the law needs to be rewritten or repealed is still a decision to be made.
“Critics of the law say it doesn’t adequately hold social media companies accountable for harmful content like misinformation and hate speech. Some Republican lawmakers have also argued that social media companies embolden anti-conservative bias and have used repealing Section 230 as a threat” according to Business Insider.
With this uncertain legal period for technology companies, Facebook, Twitter, Apple, Amazon, and Alphabet shares are dropping in premarket trading as October ends; the companies released quarterly reports which failed to impress investors.
Facebook is down 2.9%, causing investors to worry since the sites US and Canadian users are decreasing daily. Last quarter the user base fell from 198 million users to 196 million and during the final quarter, the numbers are expected to stagnate or fall even farther. Across all of Facebooks apps including Instagram, Messenger and Whatsapp users went from 3.21 billion compared to 3.14 billion in the previous quarter. Based on holiday season demands, Facebook’s ad revenue is expected to exceed numbers in the third quarter.
Twitter stock fell more than 15% today “after the company reported disappointing user growth but beat analysts’ expectations on profit and revenue.” The company grew its monetizable daily active users by 87 million last quarter to a total of 187 million which was less than analyst’s expectation of 195 million. With a surge of users in March when the pandemic drew more people back to online platforms, it will be essential for Twitter to retain that mDAU to see stock recovery by the end of 2021.
Apple shares dropped 3.6%, “the company slightly exceeded Wall Street expectations but didn’t offer fourth-quarter guidance and reported a 20% year-over-year decline in iPhone sales.” With the launch of the iPhone 12 this month, investors will now have to wait and see if consumer sales will bounce back next year.
Amazon stocks are 2.9% lower today, but the company reported that sales in Q4 range from $112 billion to $121 billion which is around a 28% to 38% growth from 2019. The company is forecasted to have an income drop between $1 billion and $4.5 billion, assuming the costs are linked to the pandemic.
JP Morgan analysts say that “while we acknowledge the concerns around 4Q20 profitability as investments in the fulfillment network push into Q4 and COVID-19 costs remain elevated, we think these investments should lead to greater share gains going forward as eCommerce adoption accelerates due to COVID-19.”
Alphabet on the other hand has risen by 7%, surpassing expectations as investors are seeing their earnings producing a strong rebound at the end of Q4.
Moving into November, tech investors should not only watch for Section 230 decisions but also keep an eye on continual fluctuations in the market due to the upcoming presidential election.
By Surina Nath