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Tag: Meta Platforms Inc

  • Digital advertising is Meta and Google’s world, and everyone else is coping with it

    Digital advertising is Meta and Google’s world, and everyone else is coping with it

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    There are two certainties in the tech world when it comes to digital advertising: Google and Meta. And then there’s everyone else.

    Through economic thick and thin, Google and Meta are the gold standards by virtue of broad reach (billions of people globally), product dominance (in search and social media, respectively) and in their positions in the lightning-fast AI race. This week’s earnings results for Alphabet Inc.
    GOOGL,
    +2.46%

    GOOG,
    +2.42%
    and Meta Platforms Inc.
    META,
    +4.42%
    proved that emphatically once again.

    Both companies rebounded from recent wobbly digital ads sales of their own through gigantic consumer reach and aggressive plans to parlay AI into ad sales. Google has developed (or dabbled) in some form of AI for at least seven years, and in a conference call with analysts Wednesday, Meta Chief Executive Mark Zuckerberg said his company will focus in the near term on AI to develop agents, ad features in existing products like Instagram and Reels, and internal productivity and efficiency. “We want to scale them, but they are hard to forecast,” he admitted.

    Read more: Meta’s stock jumps after AI, ad momentum drive earnings and revenue higher

    And: Alphabet earnings push stock up 6%, fueled by strong ad sales and strides in AI

    Conversely, for companies consigned to the also-ran category, such as Snap Inc.
    SNAP,
    +3.39%
    and X — the former Twitter — the news was bleak. Snap forecast disappointing third-quarter sales amid a spending push to draw advertisers.

    “We continue to believe it will take multiple quarters of improved execution for many investors to get more comfortable with the story longer term,” JP Morgan analysts said in a note on Snap earlier this month.

    Digital-advertising leader Google sought to remind everyone it has been doing AI a long time while Microsoft Corp.
    MSFT,
    +2.31%    ,
    a major investor in ChatGPT pioneer OpenAI, tempered its approach, Josh Wetzel, chief revenue officer at OneSignal, said in an interview. “AI’s greatest immediate value may be for Facebook advertising,” he said, pointing to it as an efficient and effective tool after Facebook encountered issues with data-privacy changes Apple Inc.
    AAPL,
    +1.35%
    made to mobile devices.

    Read more: Alphabet earnings remind Wall Street of Google’s AI prowess

    “Meta’s solid quarter adds further evidence to the view that advertisers are choosing to spend their budget on the so-called market leaders, such as Facebook and Instagram, at the expense of the smaller social-media networks, like Snap,” said Jesse Cohen, senior analyst at Investing.com.

    Jon Oberlander, executive vice president of social at digital-marketing agency Tinuiti, added: “It is, to some extent, still Meta/Google’s game, especially for performance advertisers, as the ROI and scale advertisers can find in the mid-lower funnel gap above other platforms.”

    At the same time, Forrester analyst Kelsey Chickering said linear television ad revenue will slow between now and 2027 to about $65 billion from $70 billion as traditional TV continues to lose the under-25 crowd that has fled to streaming services and creator-heavy platforms like Snapchat and TikTok.

    Digital advertising is on track to grow in the high single digits, or more, in 2023, slightly ahead of June’s forecast estimates from GroupM and Magna of around 8% each, according to Brian Wieser, head of Madison and Wall, a media and advertising consultancy for investors.

    Most of that growth will benefit Google, Meta, and Microsoft’s LinkedIn, according to data from Emburse. Conversely, Emburse found ad spending on Twitter/X has plunged 54% from a year ago in May, before Elon Musk bought the company.

    “Google, Meta and LinkedIn are platforms where people go to consume information, search for ideas, or give context to what they experiencing in their personal or work lives,” Emburse Chief Experience Officer Johann Wrede said.

    While Alphabet CEO Sundar Pichai boasted Wednesday of “continued leadership in AI and our excellence in engineering and innovation are driving the next evolution of Search” and other services, as well as improved YouTube ad sales, Meta’s addition of potential X-killer Threads could dramatically inflate its ad sales going forward.

    Zuckerberg sees potential in Threads long term despite a plunge in its user sign-ups because X is hemorrhaging advertising clients, and this week reportedly slashed ad costs to lure business customers.

    “The launch of Threads holds great promise for Meta. While there are currently no ads on the app, it’s inevitable that they will come and the ability to use data from other Meta properties for targeting is a highly lucrative proposition for brands,” Aaron Goldman, chief marketing officer at Mediaocean, said in an email.

    That translates to more near-term pain for smaller platforms such as Snap and X, which are posting negative growth, Michael Nathanson of SVB MoffettNathanson warned in a note Wednesday.

    “The truth is that Alphabet started integrating machine learning and artificial intelligence into their products and ad solutions close to a decade ago,” he said. Snap and others are scrambling to catch up.

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  • Meta stock surges after earnings as ‘year of efficiency’ pays off

    Meta stock surges after earnings as ‘year of efficiency’ pays off

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    Facebook CEO Mark Zuckerberg at the F8 Facebook Developers conference on April 30, 2019 in San Jose, California.

    Justin Sullivan | Getty Images

    Meta shares surged more than 4% on Tuesday, and were trading at their highest level since Jan. 2022, a day after the company posted stronger-than-expected results for the second quarter and gave guidance for the current period that topped analysts’ estimates.

    The company on Wednesday reported earnings per share of $2.98, which was higher than the $2.91 per share expected by a survey of Refinitiv analysts. Revenue jumped 11% year over year to $32 billion, surpassing the $31.12 billion average analyst estimate, according to Refinitiv.

    For the third quarter, the Facebook parent company forecast revenue of $32 billion to $34.5 billion. That’s above the $31.3 billion that analysts were expecting.

    The results reflect a rebound in online advertising, as well as signs that Meta CEO Mark Zuckerberg’s “year of efficiency,” or focus on cutting costs and improving profitability, is paying off.

    “While there were some mixed narratives (both qualitative and quantitative) around opex/capex in 2023/2024, our view is that management’s ‘year of efficiency’ theme continues to drive a sustained mentality shift inside the company – while long-term investments behind key objectives remain a focus area (in terms of infrastructure & talent), we expect management to continue to balance driving growth and increased returns,” Goldman Sachs analyst Eric Sheridan, who maintains a buy rating on Meta shares, wrote in a Thursday note.

    Other analysts cheered the results, pointing to strong engagement, rising monetization of its TikTok rival Reels, as well as return on investments in artificial intelligence, as bright spots in the report.

    Bank of America analyst Justin Post upped his price target on Meta shares to $375 from $350 and reiterated his buy rating on the stock.

    “Meta is hitting its stride again with a renovated tech stack and Reels strategy, gaining share in the industry,” Post wrote in a Thursday report.

    Still, Post and other analysts expressed uncertainty around Meta’s investments in the metaverse, as signaled by growing losses in the company’s Reality Labs unit. The division posted an operating loss of $3.7 billion during the second quarter, and Meta warned that it expects Reality Labs’ operating losses to continue this year, as well as “increase meaningfully” in 2024.

    CNBC’s Michael Bloom contributed to this report.

    WATCH: Internet advertising bounce back is “Meta specific”

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  • Meta’s stock jumps after AI, ad momentum drive earnings, revenue jump

    Meta’s stock jumps after AI, ad momentum drive earnings, revenue jump

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    Facebook parent Meta Platforms Inc. is raking in digital ads, as its earnings attest, and Wall Street is rewarding it. The company’s stock rose about 7% in after-hours trading Wednesday.

    Meta
    META,
    +1.39%
    reported fiscal second-quarter net income of $7.79 billion, or $2.98 a share, compared with net income of $6.7 billion, or $2.46 a share, in the year-ago quarter.

    Revenue climbed 11% to $32 billion from $28.8 billion in the year-ago quarter.

    Analysts surveyed by FactSet had expected on average net income of $2.91 a share on revenue of $31.1billion.

    Also see: Zuck beats Musk at his own game with Meta’s year of efficiency

    A rebound in advertising, the monetization of Instagram and Reels, and AI-fueled ad targeting and measurement contributed to the quarter’s performance. Meta’s better-than-expected performance comes on the heels of a similarly strong quarter from Google parent
    GOOGL,
    +5.78%

    GOOG,
    +5.59%
    Alphabet Inc. and poor results from Snap Inc.
    SNAP,
    -14.23%    .

    “We had a good quarter. We continue to see strong engagement across our apps and we have the most exciting roadmap I’ve seen in a while with Llama 2, Threads, Reels, new AI products in the pipeline, and the launch of Quest 3 this fall,” Meta Chief Executive Mark Zuckerberg said in a statement announcing the results. AI has been an increasingly dominant story line for Meta, which has quickly shifted its focus from the metaverse. Zuckerberg said AI remains the company’s near-term focus, with metaverse poised to have a long-term impact.

    “In many ways, the two are interrelated,” Zuckerberg said of AI and metaverse in a conference call with analysts. He also spotlighted the potential of Threads, a Twitter-like service that launched earlier this month with much fanfare. “When it gets to hundreds of millions of users, we’ll see how it monetizes,” he said. “It is a long road ahead.”

    Meta executives forecast third-quarter revenue of $32 billion to $34.5 billion, while analysts on average were expecting $31.2 billion, according to FactSet.

    Facebook had 2.06 billion daily active users, up 5% from a year ago, and the “family” of Meta apps — which includes Instagram — reported daily active users of 3.07 billion, up 7%.

    There were blips amid the hoopla, however. Meta says it expects 2023 total expenses will be in the range of $88 billion to $91 billion, compared to the prior range of $86 billion to $90 billion because of legal-related expenses in the second quarter. And Meta’s headcount dropped 14% from a year ago to 71,469 as of June 30. Zuckerberg said Meta’s austerity program will continue into 2024.

    Meta’s stock improved 1.4% to $298.57 in the regular session. The stock has sky-rocketed 148% so far this year, while the broader S&P 500 index 
    SPX,
    -0.02%
     has increased 19%.

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  • Meta’s Reality Labs has now lost more than $21 billion since the beginning of last year

    Meta’s Reality Labs has now lost more than $21 billion since the beginning of last year

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    Meta reported second-quarter earnings on Wednesday and said that its Reality Labs unit, which develops virtual reality and augmented reality technologies needed to power the metaverse, logged a $3.7 billion operating loss.

    The unit recorded $276 million in second-quarter sales, down from the $339 million in revenue it brought during the first quarter. Analysts polled by StreetAccount were projecting Reality Labs to record $421 million in sales and $3.5 billion in operating losses.

    Shares of Meta were up about 5% after it reported an 11% pop in revenue as advertising rebounded and the company issued an uplifting sales forecast for the third quarter. It shows that Meta is still very much an ad company with a big cost center.

    Last year, Meta’s Reality Labs unit lost a total of $13.7 billion while bringing in $2.16 billion in revenue, which is driven in part by the company’s sales of Quest-branded VR headsets. Reality Labs lost $3.99 billion during the first quarter. That puts its total losses at about $21.3 billion since the beginning of last year.

    Meta said in its earnings report that it expects operating losses in its Reality Labs unit “to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and investments to further scale our ecosystem.”

    In June, Meta announced a VR subscription service dubbed Meta Quest+, which costs $7.99 a month and is compatible with the company’s Quest 2, Quest Pro and upcoming Quest 3 headsets. The subscription service lets people access two new VR games each month, and they will be able to play those games as long as they have active subscriptions.

    Also in June, Zuckerberg revealed details about the Quest 3 headset just days before Apple announced its Vision Pro VR and AR headset that will cost a whopping $3,499 when it is released in 2024. The Quest 3 will be sold at a price starting at $499 and is 40% thinner than the Quest 2 and will contain a next-generation Qualcomm chipset, the company said.

    Watch: Snapchat+, a subscription-based revenue stream, has hit 4 million subscribers

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  • Microsoft reports slowing Azure cloud revenue growth

    Microsoft reports slowing Azure cloud revenue growth

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    Microsoft shares slipped 1% in extended trading on Tuesday after the software maker issued fiscal fourth quarter earnings.

    Here’s how the company did:

    • Earnings: $2.69 per share, vs. $2.55 per share as expected by Refinitiv.
    • Revenue: $56.19 billion, vs. $55.47 billion as expected by Refinitiv.

    Revenue rose 8% year over year in the quarter, which ended on June 30, according to a statement. Growth has come in under 10% for three consecutive quarters for the first time since 2017. Net income totaled $20.08 billion, compared with $16.74 billion in the year-ago quarter.

    Microsoft’s Intelligent Cloud segment contributed $23.99 billion in revenue, up 15% and above the $23.79 billion consensus of analysts surveyed by StreetAccount. The unit comprises the Azure public cloud, SQL Server, Windows Server, Visual Studio, Nuance, GitHub and enterprise services.

    Azure revenue grew 26% during the quarter, compared with 27% growth in the previous quarter and 40% in the year-ago quarter. Analysts polled by CNBC and by StreetAccount had expected 25% growth from Azure, which competes with Amazon Web Services and Google Cloud Platform. Microsoft doesn’t report Azure revenue in dollars. Google parent Alphabet said Tuesday that revenue from its cloud products, which includes Google Workspace productivity apps in addition to Google Cloud Platform, increased by 28%.

    Prompted by concerns about a worsening economy, organizations using cloud services from Microsoft, Amazon and Google have taken time to adjust their existing workloads to reduce costs in the past several months. At the same time, these three prominent U.S. cloud providers have trimmed their own expenses.

    For the first time since 2016, Microsoft’s research and development costs declined year over year. In May Microsoft CEO Satya Nadella told employees that the company won’t lift salaries this year. On July 10 Nadella issued a memo about a fresh round of job cuts separate from the round of layoffs affecting 10,000 workers that kicked off in January.

    Microsoft’s Productivity and Business Processes segment that contains Office productivity software, LinkedIn and Dynamics delivered $18.29 billion in revenue, up 10% and more than the StreetAccount consensus of $18.06 billion.

    The company’s More Personal Computing business, which contains the Windows operating system, devices, gaming and search advertising, posted $13.91 billion in revenue. That figure indicates a decline of about 4%, yet it still topped the $13.58 billion StreetAccount consensus.

    Sales of Windows licenses to device makers decreased by 12%. Consumers and companies rushed to buy PCs after the onset of Covid, making comparisons difficult for the past year. Technology industry researcher Gartner estimated that PC shipments, including Apple’s MacBooks, fell about 17% during the quarter.

    Microsoft and Alphabet kicked off earnings season for the mega-cap tech companies. Investors will be looking at the big tech companies for updates on cost-cutting measures implemented earlier in the year and the impact of artificial intelligence investments on profitability. Alphabet on Tuesday surpassed estimates, lifting the stock in after-hours trading. Meta reports results on Wednesday, followed by Amazon and Apple next week.

    Investors are eager for resolution in Microsoft’s arrangement to buy Activision Blizzard for almost $69 billion, which was agreed upon in January 2022. Earlier this month, an appeals court denied the Federal Trade Commission’s motion to stop the transaction. Activision shares have climbed past $92.50, close to the $95 that Microsoft agreed to pay, reflecting optimism that the deal is on track to close.

    The company said its operating expenses rose about 2% in the quarter, partly because of a charge to pay a fine from Ireland’s Data Protection Commission after the authority looked at whether the company’s LinkedIn unit violated the European Union’s General Data Protection Regulation.

    During the quarter, Microsoft built on its broad alliance with OpenAI to capitalize on fresh interest in artificial intelligence, following the November launch of the startup’s ChatGPT chatbot. Microsoft introduced a chatbot powered partly by OpenAI language models to help workers make sense of their employers’ data, and it told developers they’ll be able to build plugins that people can access through ChatGPT, the Bing search engine’s chatbot, and other tools.

    Excluding the after-hours move, Microsoft shares have gained 46% year to date, while the S&P 500 is up 19%.

    Executives will discuss the results with analysts and issue guidance on a conference call starting at 5:30 p.m. ET.

    This is breaking news. Please check back for updates.

    — CNBC’s Todd Haselton contributed to this report.

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  • Musk risks even more damage to Twitter’s business as the messaging app changes name to X

    Musk risks even more damage to Twitter’s business as the messaging app changes name to X

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    Elon Musk has long been enamored of the letter X.

    Now, he’s killing off the Twitter brand and the iconic blue bird in favor of X as part of an effort to turn his $44 billion acquisition into something that’s genuinely his.

    Musk’s vision for X is something akin to China’s WeChat, a super app that people can use for entertainment and buying goods and services online, in addition to posting updates and messaging their friends. But the rebrand comes after months of erratic behavior by the world’s richest person turned off users and pushed away advertisers, leaving Twitter in a troubled financial position and increasingly vulnerable to competition.

    Killing an iconic internet brand is “extremely risky” at a time when rival apps such as the new Instagram Threads and smaller upstarts such as Bluesky are luring users, said Mike Proulx, an analyst at Forrester.

    Musk has “singlehandedly wiped out over fifteen years of a brand name that has secured its place in our cultural lexicon,” Proulx said in an email.

    A company spokesperson didn’t provide a comment for this story.

    It’s not entirely a surprising move. Musk had already converted Twitter’s corporate name to X Corp, which itself is a subsidiary of X Holding Corp, as revealed in an April court filing. Musk said last October, just prior to buying Twitter, that he viewed the $44 billion deal as “an accelerant to creating X, the everything app.”

    The letter X features prominently in the name of Musk’s rocket company, SpaceX. And over two decades ago, X.com was the name of Musk’s payments company that eventually became PayPal through a merger with a rival at the time.

    Name changes have become fairly commonplace among storied web companies. Facebook became Meta in late 2021, and Google adopted the Alphabet moniker six years earlier. However, in those cases the newly named parent companies kept the branding of their core services, so Facebook users and Google searchers could keep doing their thing without disruption.

    Musk appears to be betting he can get rid of Twitter altogether. Over the weekend, he introduced the new X logo and said in a tweet that “soon we shall bid adieu to the twitter brand and, gradually, all the birds.”

    Linda Yaccarino, who Musk hired as CEO in May, said in an email to employees Monday that the company will “continue to delight our entire community with new experiences in audio, video, messaging, payments, banking – creating a global marketplace for ideas, goods, services, and opportunities.”

    Succeeding in that mission is easier said than done.

    Musk’s desire to turn X into a super app requires “time, money and people,” which Twitter “no longer has,” said Proulx. Earlier this month, Musk said that Twitter has suffered a 50% drop in advertising revenue and that it needs “to reach positive cash flow before we have the luxury of anything else.”  

    Some advertisers had grown concerned about promoting their products on Twitter because of reports showing a rise of hate speech and racist and offensive comments on the platform as documented by multiple civil rights groups and researchers.

    Musk has tried to offset some decline in advertising with a premium subscription service. But at $8 a month, the company would need tens of millions of subscribers to make up for the losses.

    Those advertisers remaining on the platform now have to adopt a new lingo. People and businesses around the world know Twitter messages as “tweets.” Like Kleenex, Twitter was able to develop a recognizable brand that was instantly familiar with consumers, a feat that any corporate marketing team would celebrate.

    Ralph Schackart, an analyst at William Blair, told CNBC last week that his team of analysts “didn’t pick anything up” from advertisers they polled as part of a recent survey on the digital advertising market that would indicate that these businesses had upped their spending on Twitter. Meanwhile, there are signs that the overall digital ad market could be improving, according to the William Blair survey.

    Insider Intelligence analyst Jasmine Enberg said in an emailed statement that the name change marks “a gloomy day for many Twitter users and advertisers” and a “clear signal that the Twitter of the past 17 years is gone and not coming back.”

    “Twitter’s rebrand is a reminder that Elon Musk, not Threads or any other app, is and has always been the most likely ‘Twitter killer,’” Enberg wrote.

    WATCH: Elon Musk wouldn’t be who he is without ‘demon mode’ and his drive, says biographer Isaacson

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  • U.S. stocks open higher ahead of Big Tech earnings, central-bank decisions

    U.S. stocks open higher ahead of Big Tech earnings, central-bank decisions

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    U.S. stock indexes opened higher on Monday, as the Dow Jones Industrial Average looking to extend its 10-session winning streak. Investors are awaiting a batch of earnings reports from megacap growth and technology companies while eying on monetary-policy decisions from the world’s major central banks amid continued signs that inflation is easing. The Dow industrials
    DJIA,
    +0.52%
    rose 88 points, or 0.3%, to 35,319. The S&P 500
    SPX,
    +0.40%
    gained 0.4% and the Nasdaq Composite
    COMP,
    +0.19%
    advanced 0.5%. Corporate results due on Monday include Domino’s Pizza
    DPZ,
    +0.12%    ,
    Whirlpool
    WHR,
    +0.69%    ,
    Logitech
    LOGI,
    -0.80%
    and NXP Semiconductors
    NXPI,
    -1.13%    .
    Alphabet
    GOOGL,
    +1.26%
    and Microsoft
    MSFT,
    +0.39%
    will report their numbers on Tuesday; Meta
    META,
    -0.90%
    on Wednesday; and Intel
    INTC,
    -1.15%
    on Thursday. The Federal Reserve is expected to raise interest rates by 25 basis points after its policy meeting this week. Policymakers will release a statement announcing their decision Wednesday at 2 p.m. Eastern, while Fed Chair Jerome Powell will hold a press conference at 2:30 p.m..

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  • Here’s why Wall Street has fallen out of love with Tesla — for now

    Here’s why Wall Street has fallen out of love with Tesla — for now

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    Late on Wednesday, Tesla Inc.
    TSLA,
    -1.10%
    reported that quarterly sales were up 47% from a year earlier. But the stock tumbled 10% on Thursday.

    Tesla’s shares are still up 113% this year. The company is among a group of 13 in the S&P 500 that stand out with high growth expectations for sales, earnings and free cash flow through 2025.

    But less than half of analysts polled by FactSet rate Tesla a buy. Emily Bary explains what they are worried about.

    Traders have placed large short bets against Tesla and two of its rival EV makers — Rivian Automotive Inc.
    RIVN,
    -2.09%
    and Nio Inc.
    NIO,
    +2.52%    .
    Claudia Assis looks into how well those trades have been working out.

    Cody Willard explains why he remains confident that Tesla and Rivian will dominate the EV market over the long term.

    Related coverage:

    Here’s what may propel U.S. stocks for years.

    Chipotle Mexican Grill is among 14 stocks named by Michael Brush for consideration by investors looking to ride along with long-term improvement of U.S. labor productivity.


    AP

    The S&P 500
    SPX,
    +0.03%
    has returned 19% this year, following its 18% decline in 2022. On the same basis, with dividends reinvested, the benchmark index is still down 2% since the end of 2021.

    What is going on? Michael Brush believes that a high level of corporate investment in new technology and equipment is setting the stage for a long phase of earnings growth for U.S. companies. He shares four developments behind the coming productivity boom and 14 stocks expected to benefit from it.

    A signal for the stock-market’s health


    Getty Images

    The Dow Jones Industrial Average
    DJIA,
    +0.01%
    is up 6% this year. The venerable index has trailed the S&P 500, but its closing level of 35,255.18 on Thursday was only 4% shy of its record close a 36,799.65 on Jan. 4, 2022. Joseph Adinolfi explains Dow Theory, which according to technical analysts is sending a strong bullish signal for the stock market.

    Other opinions about market sentiment:

    Even if you have resisted the idea of a Roth IRA, you may soon be forced to have one

    This year if you are age 50 or older and are already maxing-out your contribution to a 401(K), 403(B) or other qualified employer-sponsored tax-deferred retirement plan at $22,500, you can make an additional “catch up” tax deductible contribution of $7,500 for a total of $30,000. But starting in 2024, the catch up contribution will no longer be tax deductible if you earn at least $145,000 a year. You can still make the contribution with after-tax money into a Roth 401(K) account that your plan administrator may already have set up for you.

    Alessandra Malito provides more details and news about employers’ efforts to delay the rule’s implementation.

    Beth Pinker writes the Fix My Portfolio column. This week she digs into Roth IRA conversions, through which you can simplify your taxes down the line.

    A hot vote in Spain

    The center of Madrid on July 15, 2023. A brutal heat wave could affect turnout for the country’s general election on July 23.


    Uncredited

    Barbara Kollmeyer reports from Spain about a highly contested election on Sunday, with controversy over the government’s policies during the pandemic, parties’ social policies and the possibility of a coalition government that might rattle financial markets.

    Meta vs. Alphabet

    Shares of Meta Platforms Inc. and Alphabet Inc. trade only slightly higher than the S&P 500 on a forward price-to-earnings bases, while Nvidia Corp., Microsoft Corp. and Apple Inc. trade much higher.


    FactSet

    Leslie Albrecht looks at Meta Platforms Inc.
    META,
    -2.73%    ,
    which is Facebook’s holding company and has a hit on its hands with the new Threads social-media platform, and Google holding company Alphabet Inc.
    GOOGL,
    +0.69%    ,
    to consider which stock is a better buy.

    Brett Arends: ‘I used to work at Nvidia. The stock I got is now half my portfolio. Should I sell?’

    The Ratings Game

    In The Ratings Game column, MarketWatch reporters track analysts’ thoughts about various stocks. Here’s a sampling of this week’s coverage:

    You don’t know every bad factor causing air travel to be nothing but harassment

    Getting there is half the fun.


    Getty Images

    The U.S. flying scene — from shortages of equipment and labor (and runways) to ill-staffed air-traffic control towers — is a well-known nightmare for U.S. travelers. But there is more to the story. Jeremy Binckes looks into other factors that may surprise you and cause great inconvenience this summer.

    The Federal Reserve is expected to raise interest rates again next week

    The Federal Open Market Committee will meet next Tuesday and Wednesday, to be immediately followed by a policy announcement. Economists expect the central to raise the federal-funds rate by another quarter point. The question is whether or not this will end the Fed’s inflation-fighting rate cycle.

    More coverage of the Fed:

    How much would you pay for 100% downside protection in the stock market?


    MarketWatch illustration/iStockphoto

    Over the past 30 years, the SPDR S&P 500 ETF Trust
    SPY,

    has returned 1,650%, for an average annual return of 10%, with dividends reinvested, according to FactSet. But it hasn’t been a smooth ride. The ETF, which tracks the benchmark S&P 500, fell 18% last year and 37% during 2008, for example. And there have been even larger declines if the analysis isn’t confined to calendar years.

    But can you ride through market declines? Many studies have shown that most investors who try to time the market sell after a decline has started and buy back in well after a recovery is under way, which means their long-term performance can suffer significantly.

    In this week’s ETF Wrap column (and emailed newsletter), Isabel Wang describes a new buffered fund that can give you 100% downside protection over a two-year period, in return for a cap on your potential gains in the stock market. Here’s the price you would pay for the protection.

    The World Cup games have started

    Hannah Wilkinson scored the home team’s first goal against Norway during the first World Cup game in Auckland, New Zealand, on July 20.


    Getty Images

    The Women’s World Cup began Thursday with an upset victory by New Zealand over Norway.

    James Rogers reports on what is expected to be a much easier environment for FIFA and corporate sponsors than that of last year’s Men’s World Cup in Qatar.

    U.S. Soccer Federation President Cindy Parlow Cone participated in MarketWatch’s Best New Ideas in Money podcast and spoke about the long-term effort to achieve equal treatment for women soccer players.

    More coverage of the World Cup:

    Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.

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  • Meta rolls out first feature update to Threads since launch earlier this month

    Meta rolls out first feature update to Threads since launch earlier this month

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    Jaap Arriens | Nurphoto | Getty Images

    Instagram Threads, the Twitter clone Meta launched two weeks ago, is being updated to include new features, including a follows tab.

    Cameron Roth, a software engineer for Instagram, shared a Threads post Tuesday, announcing additions to the app as part of an update to Apple’s iOS.

    related investing news

    CNBC Pro

    The follows tab will presumably make it easier for people to see who is following them. Users will also be able to access a translate button to read text in other languages and more easily read posts from people they don’t follow. Roth said the iOS update includes some software bug fixes and loading improvements.

    Threads was an instant hit for Meta, which reported a record 100 million sign-ups in just five days, eliciting defensive responses from Twitter founder Elon Musk and new CEO Linda Yaccarino. However, data from Sensor Tower and Similarweb showed that the service saw some drops in growth and engagement the following week.

    Advertisers told CNBC they’re hoping for Threads to incorporate more features such as chronological feeds and the ability to search for hashtags, which could help them create better ad campaigns when Meta opens up that opportunity.

    In a separate Threads post Tuesday, Roth said regarding the update that users “may need to restart your app to see some of these or otherwise wait until the end of the day!”

    “We use a system of server-delivered flags which can take awhile to fully release,” he wrote.

    WATCH: Threads is the perfect situation at the perfect time for Meta

    Threads is the perfect situation at the perfect time for Meta, says Elevation Partner's McNamee

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  • Pinterest stock advances, Masimo shares slump on outlook and other stocks on the move

    Pinterest stock advances, Masimo shares slump on outlook and other stocks on the move

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    Here are some of the biggest movers of the day:

    Stock gainers:

    Shares of Pinterest Inc.
    PINS,
    +3.64%
    were gaining 4% after an Evercore ISI analyst moved to a bullish stance, cheering better advertising-market conditions and improvements made by Chief Executive Bill Ready, who is about a year into his stint.

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  • CNBC Daily Open: The long-awaited recession might not arrive

    CNBC Daily Open: The long-awaited recession might not arrive

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    People walk past the New York Stock Exchange (NYSE) on July 12, 2023 in New York City.

    Spencer Platt | Getty Images News | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Waiting for earnings
    U.S. stocks     made slight gains Monday, but trading volume was lower than average as investors braced for second-quarter earning. European markets, on the other hand, fell. The regional Stoxx 600 index declined 0.6% as most sectors and bourses in the region fell.

    Separating the wheat from the people
    Russia terminated the Black Sea Grain Initiative, which allowed Ukraine to export food and fertilizers from three Ukrainian ports, hours before the agreement expired. The prices of wheat, corn and soybean all rose on the news. U.N. Secretary-General Antonio Guterres previously described the deal as “indispensable” to global food security.

    Merger bonanza
    Warren Buffett’s Berkshire Hathaway reduced its stake in Activision Blizzard from 6.7% last year to 1.9% yesterday, according to a securities filing released Monday. The news comes as Microsoft inches closer to completing its $68.7 billion acquisition of Activision. Buffett previously revealed Berkshire added to its initial Activision stake in a bet the deal would close and cause shares to rise.

    Unraveling the Thread
    Meta’s Threads, its rival to Twitter, launched to great excitement. But not everyone is thrilled. House Judiciary Chair Jim Jordan has asked Meta CEO Mark Zuckerberg to hand over documents about content moderation on Threads, according to a letter obtained exclusively by CNBC. The request is related to an ongoing investigation of technology platform’s policies.

    [PRO] The S&P 5,400
    Ed Yardeni, president of Yardeni Research and previously chief investment strategist at various financial institutions, thinks the S&P 500 could go on an extended bull run and hit a record high of 5,400 within the next 18 months. Here’s why the market veteran is so optimistic.

    The bottom line

    Investors were cautiously optimistic yesterday.

    Major U.S. indexes edged up. The Dow Jones Industrial Average advanced 0.22% to hit its highest close this year. The S&P 500 gained 0.39% and the Nasdaq Composite climbed 0.93%.

    It should be noted, however, that trading volume was muted. The SPDR S&P 500 exchange-traded fund, which tracks the overall index, traded 52.4 million shares, below its 30-day average of 79.1 million.

    The slower pace of trading makes sense. Major companies are due to release their earnings reports, starting with Bank of America and Morgan Stanley on Tuesday as well as Goldman Sachs, Netflix and Tesla on Wednesday.  

    Investors braced for those reports — and they aren’t expecting good news. Analysts think second-quarter S&P 500 earnings will be more than 7% lower than they were a year ago, according to FactSet data.

    But the good news is last quarter’s earnings might be the floor. And things are looking up, not just for markets, but the economy. The long-awaited U.S. recession? Many analysts now think it’s not merely late — it might not even show up.

    With both consumer and producer price indexes cooling more than expected, “bringing inflation down to an acceptable level will not require a recession,” Goldman Sachs’ chief economist Jan Hatzius wrote, cutting his projection of a recession from 25% to 20%.

    JPMorgan Chase’s chief global markets strategist Marko Kolanovic has been skeptical of a soft landing. But even he noted that “the resilience of the US and global expansions should remain in place,” causing the bank to “downplay near-term recession risks.”

    And Ed Yardeni thinks the recession — albeit “a rolling recession,” meaning that different sectors of the economy have taken turns to contract — is already behind us. Instead, “now … we’re in a rolling recovery,” Yardeni said.

    As earnings reports are released, don’t look at companies’ figures for the past quarter. Keep an eye out for their projections for the rest of the year. We might yet see signs of hope the economy will continue growing.

     

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  • Nothing can keep tech down. Here’s how that affects our thinking about stocks

    Nothing can keep tech down. Here’s how that affects our thinking about stocks

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  • ChatGPT-maker OpenAI signs deal with AP to license news stories

    ChatGPT-maker OpenAI signs deal with AP to license news stories

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    ChatGPT-maker OpenAI and The Associated Press said Thursday that they’ve made a deal for the artificial intelligence company to license AP’s archive of news stories.

    “The arrangement sees OpenAI licensing part of AP’s text archive, while AP will leverage OpenAI’s technology and product expertise,” the two organizations said in a joint statement.

    Financial terms of the deal were not disclosed.

    The U.S. Federal Trade Commission has launched an investigation into ChatGPT creator OpenAI and whether the artificial intelligence company violated consumer protection laws by scraping public data and publishing false information through its chatbot.

    FILE - The Google logo is displayed at their offices on Nov. 1, 2018, in Granary Square, in London. Google is rolling out its artificial-intelligence powered chatbot Bard across Europe and in Brazil, expanding its availability to hundreds of millions more users in dozens of additional languages. The company also said Thursday, July 13, 2023, that it’s adding more features to Bard, as it scrambles to keep up with rival Microsoft, which uses OpenAI’s popular ChatGPT service in its Bing search engine.(AP Photo/Alastair Grant, File)

    Google says it’s rolling out its AI-powered chatbot Bard across Europe and in Brazil, expanding its availability to hundreds of millions more users.

    FILE - Tesla and SpaceX CEO Elon Musk speaks at the SATELLITE Conference and Exhibition, March 9, 2020, in Washington. Musk is finally starting to talk about the artificial intelligence company he founded to compete with ChatGPT-maker OpenAI. The startup, xAI, had its formal launch Wednesday, July 12, 2023, and says its goal “is to understand the true nature of the universe.” (AP Photo/Susan Walsh, File)

    Elon Musk is finally starting to talk about the artificial intelligence company he founded to compete with ChatGPT-maker OpenAI.

    File - Sarah Silverman introduces a performance at the 75th annual Tony Awards on Sunday, June 12, 2022, in New York. Silverman sued ChatGPT-maker OpenAI for copyright infringement this week, joining a growing number of writers who say they unwittingly built the foundation for Silicon Valley's red-hot AI boom. (Photo by Charles Sykes/Invision/AP, File)

    Ask ChatGPT about comedian Sarah Silverman’s memoir “The Bedwetter” and the artificial intelligence chatbot can come up with a detailed synopsis of every part of the book.

    OpenAI and other technology companies must ingest large troves of written works, such as books, news articles and social media chatter, to improve their AI systems known as large language models. Last year’s release of ChatGPT has sparked a boom in “generative AI” products that can create new passages of text, images and other media.

    The tools have raised concerns about their propensity to spout falsehoods that are hard to notice because of the system’s strong command of the grammar of human languages. They also have raised questions about to what extent news organizations and others whose writing, artwork, music or other work was used to “train” the AI models should be compensated.

    This week, the U.S. Federal Trade Commission told OpenAI it had opened an investigation into whether the company had engaged in unfair or deceptive privacy or data security practices in scraping public data — or caused harm by publishing false information through its chatbot products. The FTC did not immediately reply to a request for comment on the investigation, which The Washington Post was first to report.

    Along with news organizations, book authors have sought compensation for their works being used to train AI systems. More than 4,000 writers — among them Nora Roberts, Margaret Atwood, Louise Erdrich and Jodi Picoult — signed a letter late last month to the CEOs of OpenAI, Google, Microsoft, Meta and other AI developers accusing them of exploitative practices in building chatbots that “mimic and regurgitate” their language, style and ideas. Some novelists and the comedian Sarah Silverman have also sued OpenAI for copyright infringement.

    “We are pleased that OpenAI recognizes that fact-based, nonpartisan news content is essential to this evolving technology, and that they respect the value of our intellectual property,” said a written statement from Kristin Heitmann, AP senior vice president and chief revenue officer. “AP firmly supports a framework that will ensure intellectual property is protected and content creators are fairly compensated for their work.”

    The two companies said they are also examining “potential use cases for generative AI in news products and services,” though didn’t give specifics. OpenAI and AP both “believe in the responsible creation and use of these AI systems,” the statement said.

    OpenAI will have access to AP news stories going back to 1985.

    The AP deal is valuable to a company like OpenAI because it provides a trove of material that it can use for training purposes, and is also a hedge against losing access to material because of lawsuits that have threatened its access to material, said Nick Diakopoulos, a professor of communications studies and computer science at Northwestern University.

    “In order to guard against how the courts may decide, maybe you want to go out and sign licensing deals so you’re guaranteed legal access to the material you’ll need,” Diakopoulos said.

    The AP doesn’t currently use any generative AI in its news stories, but has used other forms of AI for nearly a decade, including to automate corporate earnings reports and recap some sporting events. It also runs a program that helps local news organizations incorporate AI into their operations, and recently launched an AI-powered image archive search.

    The deal’s effects could reach far beyond the AP because of the organization’s size and its deep ties to other news outlets, said news industry analyst Ken Doctor.

    When AP decided to open up its content for free on the internet in the 1990s, it led many newspaper companies to do the same, which “turned out to be a very bad idea” for the news business, Doctor said.

    He said navigating “a new, AI-driven landscape is deeply uncertain” and presents similar risks.

    “The industry is far weaker today. AP is in OK shape. It’s stable. But the newspaper industry around it is really gasping for air,” Doctor said. “On the positive side, AP has the clout to do a deal like this and can work with local publishers to try to assess both the potential and the risk.”

    ___

    Associated Press writer David Bauder contributed to this report.

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  • Cramer: The Cassandras are wrong about the market (again) — here’s why I’m upbeat

    Cramer: The Cassandras are wrong about the market (again) — here’s why I’m upbeat

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    Visitors around the ‘Charging Bull’ statue near the New York Stock Exchange (NYSE) in New York, US, on Thursday, June 29, 2023.

    Victor J. Blue | Bloomberg | Getty Images

    The boogeymen continue to be fictional, despite endless attempts to drum up fear and hasten the departure of millions of scared investors. I’m calling the endless negative prattle the “Bear Bilge,” the stuff thrown at us that seems so cerebral and intellectual, but just turns out to miss the mark.

    I’m being plenty genteel in that summary. I won’t stay that way.

    You know my thesis by now. There are dozens of commentators who come on-air and posit the “hard landing” scenario for the economy, making it clear that we are indeed on the eve of destruction. These Cassandras are from two camps. The first is made up of negative analysts who dug in their heels and overstayed their welcome. The second group is wealthy hedge fund managers and individuals who see no harm in generating chills simply because they don’t think they are doing so. They regard their fear-mongering as first class advice that can’t possibly have consequences. I get that. If the market crashes they will be lauded for a lifetime. if it percolates, big deal — they didn’t tell you to sell, they just told you not to buy. 

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  • TD Cowen upgrades Meta as social media stock enters second half of ‘Year of Efficiency’

    TD Cowen upgrades Meta as social media stock enters second half of ‘Year of Efficiency’

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  • Nasdaq is making a big change to its most popular index. Here’s how it might impact your portfolio.

    Nasdaq is making a big change to its most popular index. Here’s how it might impact your portfolio.

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    Big Tech has gotten too big for Nasdaq’s liking.

    So the exchange has decided to make some changes to the Nasdaq 100 index, its most popular index, according to company representatives, ostensibly to diminish the concentration risk that accompanies having an index that derives more than half of its value from just seven companies.

    Nasdaq announced late last week that the Nasdaq 100
    NDX,
    +1.24%
    will undergo a special rebalancing that will take effect prior to the market open on July 24. It’s only the third time that Nasdaq has announced such an impromptu rejiggering of how much individual stocks contribute to the index. Although Nasdaq can also reconstitute the index regularly every December, and there’s also a mechanism to rebalance every quarter as well.

    In a statement announcing the move, the exchange alluded to the fact that the largest companies in the technology sector have too much sway over the index’s price. Nasdaq said special rebalancing can be implemented “to address overconcentration in the index by redistributing the weights.”

    The rebalancing comes at a critical time. The Nasdaq 100 has risen 40% since the start of 2023, largely thanks to the “Magnificent Seven,” a handful of megacap technology names that have powered much of the U.S. stock market’s rally this year.

    These gains have pushed the index to its highest level since mid-January 2022, meaning that Big Tech has now retraced nearly all of last year’s losses, and might soon be headed for the all-time highs from November 2021.

    As of Thursday, the Magnificent Seven stocks — Nvidia Corp.
    NVDA,
    +3.53%    ,
    Apple Inc.
    AAPL,
    +0.90%    ,
    Microsoft Corp.
    MSFT,
    +1.42%    ,
    Amazon.com Inc.
    AMZN,
    +1.57%    ,
    Tesla Inc.
    TSLA,
    +0.82%    ,
    Meta Platforms Inc.
    META,
    +3.70%
    and Alphabet Inc.’s Class A
    GOOGL,
    +1.53%
    and Class C
    GOOG,
    +1.62%
    shares — accounted for 55% of the Nasdaq 100’s market capitalization, while the top five names account for more than 45%.

    According to Nasdaq’s official methodology, the goal is to keep the aggregate weighting of the biggest stocks below 40%. In fact, it’s possible that Tesla Inc. surpassing 4.5% of the index earlier this month triggered the Nasdaq’s rebalancing announcement, according to analysts from UBS Group AG
    UBS,
    +1.87%    .

    Exactly how it plans to accomplish this isn’t yet known. Nasdaq said the new weighting scheme will be unveiled on Friday, likely after the U.S. market close. But the UBS team has an educated guess.

    “The quarterly reviews would dictate that the aggregate weight to securities exceeding 4.5% be set to 40%. If that’s the approach Nasdaq takes, then we’d expect the weights of Microsoft, Apple, Nvidia, Alphabet, Amazon, and Tesla to be reduced,” the team said in a note shared with MarketWatch.

    For investors trying to anticipate how this might impact their portfolios, here the answers to a few key questions.

    Could the rebalancing kill the U.S. stock market rally?

    Not likely. Or rather: if the rally in Big Tech does falter, history suggests it won’t be because of the rebalancing.

    Here’s more on that from Nicholas Colas, co-founder of DataTrek Research, who discussed the topic in commentary emailed to MarketWatch on Wednesday.

    “…[T]here is the natural inclination to think that the upcoming special reweighting is a sign that large cap disruptive tech is set to roll over because a handful of names have so handily outpaced the rest of its notional peers,” Colas said.

    “History suggests otherwise. The last 2 one-off reweights were in 2011 and 1998. Neither proved to be the end of a Nasdaq 100/tech stock bull market. Not even close, really.”

    More immediately, ETF experts expect trading around the rebalancing will be relatively muted.

    “While it sounds scary, Investors are well positioned — this has been well bantered about,” said David Lutz, head of ETF Trading at Jones Trading, in comments emailed to MarketWatch.

    How could this benefit investors?

    Since megacap technology stocks don’t pay much, if anything, in dividends, the rebalancing could increase the amount of dividends that ETF investors receive each year, according to a team of analysts at JPMorgan Chase & Co.

    Since the largest constituents pay a dividend yield well below the index average, the redistribution of weight from them to the rest of the index will result in a “meaningful boost” to the regular payouts received by investors, which will boost the total return of Nasdaq 100-tracking ETFs and mutual funds.

    Will there be any short-term costs associated with the rebalancing?

    There might be. Since the new index weightings will be announced in advance, investors will have plenty of time to front-run the rebalancing trade.

    Still, there are plenty of hedge funds and proprietary trading firms that run strategies explicitly designed to profit from rebalancing. These firms profits have to come from somewhere, and the logical place would be the fund managers of the Invesco QQQ exchange-traded fund
    QQQ,
    +1.26%

    QQQM,
    +1.27%    .

    “There are prop traders and hedge funds that run the strategy of providing liquidity to indexes with the expectation that they’ll earn profits,” said Roni Israelov, president and CIO at Wealth Manager NDVR, during a phone interview with MarketWatch.

    “if they are earning profits by providing that liquidity, the expectation is those profits are being paid by investors in those funds.”

    So far at least, markets appear to have taken news of the rebalancing in stride. Megacap technology names tumbled earlier this week, but they’ve since recouped those losses and then some.

    The Nasdaq Composite
    COMP,
    +1.15%    ,
    another Nasdaq index that isn’t quite as heavily weighted toward Big Tech, rose 1.2% to 13,918.96.

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  • Google and Meta got customer data from tax prep firms, and lawmakers want a probe

    Google and Meta got customer data from tax prep firms, and lawmakers want a probe

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    Sen. Elizabeth Warren (D-MA) speaks during a Senate Banking Committee hearing on Capitol Hill on June 13, 2023 in Washington, DC. The committee held the hearing to review “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress.” 

    Michael A. Mccoy | Getty Images

    A group of lawmakers led by Massachusetts Democratic Senator Elizabeth Warren are calling on the Biden administration to investigate how tax prep software companies may have illegally shared customer data with tech platforms Google and Meta.

    In a letter to Attorney General Merrick Garland, Federal Trade Commission Chair Lina Khan, Internal Revenue Service Commissioner Daniel Werfel and Treasury Inspector General for Tax Administration J. Russell George, the lawmakers laid out key findings from their own probe expanding on reporting from The Markup and The Verge, which initially revealed the data sharing. The FTC declined to comment on the letter and the other agencies named did not immediately respond to a request for comment.

    In a story published last year, the publications jointly reported that tax prep software companies TaxSlayer, H&R Block, and TaxAct had shared sensitive financial information with Meta’s Facebook through a piece of code known as a pixel. The report found that Meta pixel trackers sent names, emails and income information to Meta, in violation of the platform’s policies.

    The report also found that TaxAct had sent similar information to Google through its analytics tool, but that information did not include names.

    After the initial report, Meta and Google both told CNBC they have policies against customers or advertisers sending them sensitive or identifying information. Some statements the tax prep companies provided to the publications at the time seemed to indicate the data sharing was done accidentally.

    Building on the original reporting, the group of seven lawmakers opened their own probe into the extent of the data sharing. Among their findings released Wednesday, the lawmakers said that millions of taxpayers’ information had been shared with Big Tech firms through the tax prep software and that both the tax prep companies and tech firms were “reckless” in how they handled sensitive information. Although the companies said information shared would have been anonymous, the lawmakers found that experts believed it wouldn’t be hard to connect the data to individuals.

    Sens. Ron Wyden, D-Ore., Richard Blumenthal, D-Conn., Tammy Duckworth, D-Ill., Bernie Sanders, I-Vt., Sheldon Whitehouse, D-R.I., and Rep. Katie Porter, D-Calif., joined Warren in the investigation and letter.

    While the tax prep companies installed Meta and Google’s tools without fully understanding the privacy implications, according to the lawmakers, the two tech platforms failed to provide enough information about how they would collect and use the information gathered through their tools. Although Meta and Google both said they have filters to catch sensitive data that’s inadvertently collected, they seemed to be “ineffective,” the lawmakers wrote.

    The probe also found that Meta tools used by TaxAct allegedly collected even more information than previously reported, including the approximate amount of federal taxes a person owed. They said that Meta confirmed it used data collected from the tax software providers “to target ads to taxpayers, including for companies other than the tax prep companies themselves, and to train Meta’s own AI algorithms.”

    The group believes that their findings indicate the tax prep companies “may have violated taxpayer privacy laws,” which could result in criminal penalties “up to $1,000 per instance and up to a year in prison,” according to the letter.

    After calling for the agencies to investigate and prosecute where necessary, the lawmakers noted that new policies may mitigate the issue in the future.

    “We also welcome the recent IRS announcement of a free, direct file pilot next year, which will give taxpayers the option to file taxes without sharing their data with untrustworthy and incompetent tax preparation firms,” they wrote.

    Subscribe to CNBC on YouTube.

    WATCH: Facebook battles Apple over user privacy features in iOS update

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  • Twitter traffic is ‘tanking’ as Meta’s Threads hits 100 million users

    Twitter traffic is ‘tanking’ as Meta’s Threads hits 100 million users

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    In this photo illustration, the Threads logo by META is displayed on a smartphone with Twitter logo in the background. Threads is the new social network from Meta Platforms which was launched on the 5th of July 2023. 

    Omar Marques | Lightrocket | Getty Images

    User traffic on Twitter has slowed since the launch of Meta‘s text-based platform Threads, which has already surpassed 100 million sign-ups since its debut last week.

    Threads launched in the U.S. Wednesday and is being touted by Meta executives like Instagram chief Adam Mosseri as a more positive “public square” for communities “that never really embraced Twitter.” So far, users seem to be on board.

    “Threads reached 100 million sign ups over the weekend. That’s mostly organic demand and we haven’t even turned on many promotions yet. Can’t believe it’s only been 5 days!” Meta CEO Mark Zuckerberg said in a post on Monday.

    Twitter appears to have taken a hit. Matthew Prince, CEO of Cloudflare, shared a screenshot to Twitter Sunday showing that traffic on the platform was “tanking.”

    Twitter responded to CNBC’s request for comment with an automated response. Meta didn’t offer additional comment beyond Zuckerberg’s post.

    The booming growth on Threads is helped by the fact that it is tied to an existing social network, Meta’s Instagram. Users can sign up with their existing handles on Instagram and are able to retain some of their following as others sign up for the app.

    Threads reached the 100 million milestone even faster than OpenAI’s generative chatbot ChatGPT, which surpassed 100 million monthly users in two months.

    The app still has lots of room to grow, having not yet launched in Europe, where Mosseri said there is still some regulatory complexity to navigate. If Threads is able to retain its userbase, it could solidify its position as a real competitor for Twitter, which reported nearly 238 million monetizable daily active users in its last quarterly earnings report as public company last summer.

    Twitter owner Elon Musk appears to have already shown some concern about Threads, as his longtime lawyer Alex Spiro wrote a letter to Meta accusing the company of “unlawful misappropriation” of trade secrets.

    Musk and Zuckerberg were also taking shots at one another over the weekend, as Zuckerberg mocked Musk’s tweet style and Musk called Zuckerberg a derogatory name.

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  • Mark Zuckerberg concealed his kids’ faces on Instagram. Should you? | CNN Business

    Mark Zuckerberg concealed his kids’ faces on Instagram. Should you? | CNN Business

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    CNN
     — 

    When Mark Zuckerberg shared a photo on Instagram of his family on July 4, two things stuck out: the billionaire CEO wore a striped souvenir cowboy hat, and the faces of his children were replaced with happy face emojis.

    Zuckerberg’s post was promptly criticized by some who saw the decision to obscure the faces as a reflection of his privacy concerns for sharing pictures of his children online, despite his creating massive platforms that allow millions of other parents to do just that.

    Meta, Instagram’s parent company, has long been scrutinized over how it handles user privacy and for the way its algorithms can be used to lead young users down potentially harmful rabbit hoes.

    But the choice also highlights a broader trend among some social media users, and particularly among high-profile individuals, to be more cautious in sharing identifiable pictures of their children online.

    For years, celebrities from Kristen Bell and Gigi Hadid to Chris Pratt and Orlando Bloom have been blurring images or using emojis to help protect their kids’ privacy on social media. Zuckerberg, too, had previously posted pictures of the back of his daughters’ heads and their side profiles rather than showing their entire faces.

    It’s more rare for everyday users to take a similar approach — but perhaps it shouldn’t be.

    “By modeling for us that he was careful not to share his family’s location or childrens’ identities, he may be communicating that it is the end users’ responsibility to protect themselves online,” said Alexandra Hamlet, a New York City-based psychologist who closely follows the impact of social media on young users.

    Meta did not respond to a request for comment.

    Few things are as central to the parenting experience as showing numerous, possibly embarrassing, pictures of your children with anyone who will stop and look. But over the years, a growing number of parents and experts have raised concerns about the risks of sharing these pictures on social media, including the possibility of exposing kids to identify theft and facial recognition technology, as well as creating an internet history that could follow them into adulthood.

    Some parents choose to either restrict how much they share about their kids or limit sharing to less public platforms. Others adopt more clever hacks like obscuring their children’s faces.

    Leah Plunkett, author of “Sharenthood” and associate dean of learning experience and innovation (LXI) at Harvard Law School, said blocking a child’s face is a symbol that you’re giving them control over their own narrative.

    “Every time you post about your kids, you are chipping away at allowing them to tell their own stories about who they are and who they want to become,” she said. “We grow up making mischief and more than a few mistakes and grow up better having made them. If we lose the privacy of teens and kids to play and explore, and to live and through trial and error, we will deprive them of the ability to develop and tell stories [on their own terms].”

    Noticeably, Zuckerberg did not obscure the face of his infant daughter, which might suggest less concern with the risks for a baby’s face than a young child. However, Plunkett said artificial intelligence technology can be used to trace a face’s changes over time and may still be able to later connect any child, even a baby, to an image of them when older.

    Plunkett believes social media companies can do more, such as offering a setting that automatically blurs kids’ faces or prevents any picture with a child from being used for marketing or advertising purposes.

    For now, however, the onus remains on parents to limit or abstain sharing photos of their kids online.

    “It’s not just parents – grandparents, coaches, teachers and other trusted adults should also keep kids out of photos and videos to protect their privacy, safety, future and current opportunities, and their ability to figure out their own story about themselves and for themselves,” she said.

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  • How the generative A.I. boom could forever change online advertising

    How the generative A.I. boom could forever change online advertising

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    Sebastien Bozon | AFP | Getty Images

    Shortly after ChatGPT hit the market last year and instantly captured headlines for its ability to appear human in answering user queries, digital marketing veteran Shane Rasnak began experimenting.

    As someone who had built a career in creating online ad campaigns for clients, Rasnak saw how generative artificial intelligence could transform his industry. Whether it was coming up with headlines for Facebook ads or short blurbs of ad copy, Rasnak said, jobs that would have taken him 30 minutes to an hour are now 15-minute projects.

    And that’s just the beginning.

    Rasnak is also playing with generative AI tools such as Midjourney, which turns text-based prompts into images, as he tries to dream up compelling visuals to accompany Facebook ads. The software is particularly handy for someone without a graphic design background, Rasnak said, and can help alongside popular graphic-editing tools from Canva and Adobe’s Photoshop.

    While it’s all still brand new, Rasnak said generative AI is “like the advent of social media” in terms of its impact on the digital ad industry. Facebook and Twitter made it possible for advertisers to target consumers based on their likes, friends and interests, and generative AI now gives them the ability to create tailored messaging and visuals in building and polishing campaigns.

    “In terms of how we market our work, the output, the quality and the volume that they’re able to put out, and how personalized you can get as a result of that, that just completely changes everything,” Rasnak said.

    Rasnak is far from alone on the hype train.

    Meta, Alphabet and Amazon, the leaders in online advertising, are all betting generative AI will eventually be core to their businesses. They’ve each recently debuted products or announced plans to develop various tools to help companies more easily create messages, images and even videos for their respective platforms.

    Their products are mostly still in trial phases and, in some cases, have been criticized for being rushed to market, but ad experts told CNBC that, taken as a whole, generative AI represents the next logical step in targeted online advertising.

    “This is going to have a seismic impact on digital advertising,” said Cristina Lawrence, executive vice president of consumer and content experience at Razorfish, a digital marketing agency that’s part of the ad giant Publicis Groupe.

    In May, Meta announced its AI Sandbox testing suite for companies to more easily use generative AI software to create background images and experiment with different advertising copy. The company also introduced updates to its Meta Advantage service, which uses machine learning to improve the efficiency of ads running on its various social apps.

    Meta has been pitching the Advantage suite as a way for companies to get better performance from their campaigns after Apple’s 2021 iOS privacy update limited their ability to track users across the internet.

    ‘Personalization at scale’

    As these new offerings improve over time, a bicycle company, for example, could theoretically target Facebook users in Utah by showing AI-generated graphics of people cycling through desert canyons, while users in San Francisco could be shown cyclists cruising over the Golden Gate Bridge, ad experts predict. The text of the ad could be tailored based on the person’s age and interests.

    “You can be using it for that sort of personalization at scale,” Lawrence said.

    Meta’s Advantage service has been gaining traction with retailers using it for automated shopping ads, according to data shared with CNBC by online marketing firm Varos.

    In May 2023, roughly 2,100 companies spent $47 million, or about 27.5% of their combined total monthly Meta advertising budgets on Advantage+, the Varos data showed. A month earlier, those companies directed 26.6% of their budget, or $44.9 million, to Advantage+.

    Last August, when Meta formally debuted its Advantage+ automated shopping ads, companies put less than 1% of their Meta ad spend into the offering.

    Meta Platforms CEO Mark Zuckerberg speaks at Georgetown University in Washington, Oct. 17, 2019.

    Andrew Caballero-Reynolds | AFP | Getty Images

    Varos CEO Yarden Shaked said the increase shows Facebook is having some success in persuading advertisers to rely on its automated ad technology. However, Shaked said he’s “not sold on the creative piece yet,” regarding Meta’s nascent foray into providing generative AI tools for advertisers.

    Similarly, Rasnak said Midjourney’s tool isn’t “quite there yet” when it comes to producing realistic imagery that could be incorporated into an online ad, but is effective at generating “cartoony designs” that resonate with some smaller clients.

    Jay Pattisall, an analyst at Forrester, said several major hurdles prevent generative AI from having a major immediate impact on the online ad industry.

    One is brand safety. Companies are uncomfortable outsourcing campaigns to generative AI, which can generate visuals and phrases that reflect certain biases or are otherwise offensive and can be inaccurate.

    Earlier this year, Bloomberg News found that AI-created imagery from the popular Stable Diffusion tool produced visuals that reflected a number of stereotypes, generating images of people with darker skin tones when fed prompts such as “fast-food worker” or “social worker” and associating lighter skin tones with high-paying jobs.

    There are also potential legal issues when it comes to using generative AI powered by models trained on data that’s “scraped from the internet,” Pattisall said. Reddit, Twitter and Stack Overflow have said they will charge AI companies for use of the mounds of data on their platforms.

    Scott McKelvey, a longtime marketing writer and consultant, cited other limitations surrounding the quality of the output. Based on his limited experience with ChatGPT, the AI chatbot created by OpenAI, McKelvey said the technology fails to produce the kind of long-form content that companies could find useful as promotional copy.

    “It can provide fairly generic content, pulling from information that’s already out there,” McKelvey said. “But there’s no distinctive voice or point of view, and while some tools claim to be able to learn your brand voice based on your prompts and your inputs, I haven’t seen that yet.”

    An OpenAI spokesperson declined to comment.

    A spokesperson for Meta said in an email that the company has done extensive research to try to mitigate bias in its AI systems. Additionally, the company said it has brand-safety tools intended to give advertisers more control over where their ads appear online and it will remove any AI-generated content that’s in violation of its rules.

    “We are actively monitoring any new trends in AI-generated content,” the email said. “If the substance of the content, regardless of its creation mechanism, violates our Community Standards or Ads Standards, we remove the content. We are in the process of reviewing our public-facing policies to ensure that this standard is clear.”

    The Meta spokesperson added that as new chatbots and other automated tools come to market, “the industry will need to find ways to meet novel challenges for responsible deployment of AI in production” and “Meta intends to remain at the forefront of that work.”

    Stacy Reed, an online advertising and Facebook ads consultant, is currently incorporating generative AI into her daily work. She’s using the software to come up with variations of Facebook advertising headlines and short copy, and said it’s been helpful in a world where it’s more difficult to track users online.

    Reed described generative AI as a good “starting point,” but said companies and marketers still need to hone their own brand messaging strategy and not rely on generic content. Generative AI doesn’t “think” like a human strategist when producing content and often relies on a series of prompts to refine the text, she explained.  

    Thus, companies shouldn’t simply rely on the technology to do the big picture thinking of knowing what themes resonate with different audiences or how to execute major campaigns across multiple platforms.

    “I’m dealing with large brands that are struggling, because they’ve been so disconnected from the average customer that they’re no longer speaking their language,” Reed said.

    For now, major ad agencies and big companies are using generative AI mostly for pilot projects while waiting for the technology to develop, industry experts said.

    Earlier this year, Mint Mobile aired an ad featuring actor and co-owner Ryan Reynolds reading a script that he said was generated from ChatGPT. He asked the program to write the ad in his voice and use a joke, a curse word and to let the audience know that the promotion is still going.

    After reading the AI-created text, Reynolds said, “That is mildly terrifying, but compelling.”

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