Tag: Social Media

Trump Media’s Truth Social Faces Market Turmoil as Shares Plummet

Posted on by slightbourne@noblecapitalmarkets.com

The digital media landscape is witnessing a dramatic shakeup as Trump Media & Technology Group, the company behind the conservative social network Truth Social, experiences a sharp decline in its stock value. The Nasdaq-listed company, trading under the ticker DJT, has seen its shares plummet by over 40% since early June, opening at a mere $27 per share on Thursday. This downturn has sent shockwaves through the social media stock market, raising questions about the future of alternative platforms in an increasingly competitive digital ecosystem.

The sell-off intensified Thursday, with shares sinking as much as 15% shortly after the opening bell, continuing a trend that has wiped billions from the company’s market capitalization. This steep decline has had a profound impact on the paper wealth of former President Donald Trump, the majority stakeholder in the company. Trump’s 114,750,000 shares, once valued at over $5.6 billion in early June, have now plummeted to around $3.2 billion – a staggering loss of approximately $2.4 billion in less than a month.

The catalyst for this market turbulence appears to be rooted in recent legal developments. The company’s stock began its downward spiral on May 30, coinciding with a New York jury’s decision to convict the former president on 34 felony counts of falsifying business records. This legal setback has evidently shaken investor confidence, highlighting the potential risks associated with companies closely tied to controversial public figures.

Adding to the tumult, Trump Media recently reached a crucial milestone in its regulatory journey. The Securities and Exchange Commission (SEC) declared the company’s registration statement effective, a development that triggered significant market reaction. The stock fell nearly 10% during Tuesday’s trading session on more than double the average volume, followed by a further 17% plunge in after-hours trading following the announcement.

This SEC approval marks a pivotal moment for Trump Media, authorizing early investors to exercise warrants and allowing stockholders to publicly resell securities covered by the registration statement. While this development provides greater liquidity for existing shareholders, it also introduces the potential for increased selling pressure, which could further impact the stock’s performance.

The volatility surrounding Trump Media serves as a case study in the challenges faced by emerging social media platforms as they navigate the complex interplay of market forces, regulatory requirements, and public perception. As the digital advertising landscape continues to evolve, investors and industry observers are closely watching how alternative social networks like Truth Social can carve out their niche and sustain growth in a highly competitive market.

The unfolding situation at Trump Media also underscores the importance of diversification in investment portfolios, particularly when dealing with stocks tied to high-profile individuals or emerging technologies. As the company strives to weather this storm, its ability to adapt to changing market conditions and demonstrate sustainable user growth will be crucial in regaining investor confidence.

In the broader context of social media innovation and digital marketing trends, the Trump Media saga highlights the ongoing shifts in online engagement and content monetization strategies. As users increasingly seek out niche platforms that align with their values and interests, the success of companies like Trump Media may hinge on their ability to foster engaged communities while navigating the complex regulatory and financial landscapes of the modern digital economy.

As this story continues to develop, it will undoubtedly remain a focal point for those interested in the intersection of technology, politics, and finance, offering valuable insights into the future of social media entrepreneurship and the challenges of building sustainable digital platforms in today’s rapidly changing online environment.

The Screen Time Debate: How Potential Regulations Could Impact Social Media Stocks

Posted on by slightbourne@noblecapitalmarkets.com

As concerns over excessive screen time’s effects on kids escalate, the debate around regulating underage social media usage is intensifying – with major investing implications. The recent Florida law restricting online activity for those under 14 is just the beginning of a broader regulatory reckoning that could fundamentally disrupt platforms’ business models.

At the heart of the issue is big tech’s reliance on attention-grabbing, addictive algorithms to maximize engagement and ad revenue. Social media giants like Meta (NASDAQ: META) that own Facebook, Instagram, and WhatsApp have been criticized for tactics some argue exploit youths’ developmental vulnerabilities for profit.

Multiple studies link excessive social media use to disrupted sleep, lower self-esteem, cyberbullying, depression and more in young users. The long-term impacts remain largely unknown. But public pressures are mounting for these companies to better safeguard kids’ wellbeing over relentless growth.

From an investing standpoint, implementing robust parental controls and age verification mechanisms won’t come cheap. Significant compliance costs from stricter age-based targeting rules could compress Meta and peers’ profit margins, at least temporarily. Their scale across billions of users also makes effective content moderation extremely challenging.

As the regulatory tide shifts with bipartisan support for reining in big tech, new rules seem inevitable. Major changes to restrict underage social media engagement could be highly disruptive for growth trajectories if companies are forced to sacrifice lucrative younger audiences.

Instituting stronger guardrails proactively may let incumbents get ahead of even harsher regulatory crackdowns down the road. But their interim earnings could certainly take a hit from product reinventions reprioritizing child safety over engagement-driven profits.

Analysts expect this youth social media regulation debate will be a hot topic at upcoming consumer and tech investor conferences. With both policymakers and the public increasingly scrutinizing potential harms to kids, social platforms face intensifying pressures.

Some investors view any guardrails on big tech’s ability to monetize younger demographics as an existential risk to business models predicated on constant user growth. For companies like Meta that have operated with minimal oversight, preparing for a future of tighter digital reins on underage users is now prudent risk management.

Conversely, those with a longer-term outlook see upcoming regulatory requirements as valuations repressing near-term earnings overshoots. Any share price dips from compliance costs could actually present compelling entry points. Responsible corporate reforms demonstrating a willingness to evolve with the times could bolster brand equity and customer loyalty over the long haul.

Ultimately, the rapidly evolving online landscape demands new frameworks beyond the antiquated Children’s Online Privacy Protection Act established in the Web 1.0 era. Whether through new federal legislation, FTC action, or a combination, transformative change is coming to minors’ social media experiences. Well-prepared companies insulating ethical practices into their models now could emerge as winners, while those digging in their heels may face an existential reckoning down the road.

Investors should make plans to attend events like Noble Capital Markets Consumer, Communications, Media & Technology Conference scheduled for June, to dive deeper into these critical issues shaping the future of the social media industry and the AI revolution. With potential regulatory bombshells looming, having an informed perspective will be key for constructing a winning investment thesis in this pivotal sector.

Trump’s Truth Social Debut: A High-Stakes Gamble for Bullish Investors

Posted on by slightbourne@noblecapitalmarkets.com

Donald Trump’s social media platform Truth Social hit the public markets with a bang, surging over 30% on its first day of trading and ballooning the former president’s stake in the company to over $5 billion. However, the staggering valuation and volatility highlight both the risks and potential rewards for investors looking to capitalize on Truth Social’s polarizing popularity.

Trading under the appropriate ticker DJT, Truth Social’s parent company managed to achieve a peak market capitalization around $9 billion despite the fledgling business having under $5 million in sales over the prior year. The massive $6.8 billion opening valuation put Truth Social on par with well-established companies like U.S. Steel and Skechers.

This eye-popping disconnect from financial fundamentals echoes the frenzied trading in meme stocks like GameStop that has gripped markets in recent years. In Truth Social’s case, the dramatic stock rise seems fueled largely by Trump’s devoted base of supporters, who have banded together to push up the shares.

For investors who bought in early, those efforts have paid off handsomely – at least on paper. However, cashing in those gains won’t be easy for Trump himself or others with a major stake. Stocks that go public through deals like Truth Social’s typically prohibit insider sales for 6 months.

Trump and the seven-member Truth Social board, stacked with allies like his son Don Jr., certainly have incentive to allow some profits to be taken off the table soon. Any signal of insider selling could severely dent the company’s lofty stock price if shareholders perceive waning confidence.

Therein lies one of the biggest risks surrounding an investment in Truth Social – the potential for exceedingly high volatility driven by speculation rather than business performance. If Trump’s devoted base sours on the company’s prospects, a spiral could ensue.

On the other hand, the frenzied first day demonstrated how Trump’s mere involvement and ability to marshal his base can supercharge an investment thesis, at least in the short term.

Additionally, Trump may receive tens of millions of extra shares if the sky-high valuation holds up in the coming weeks. This would further concentrate his influence over the company’s future.

For risk-tolerant investors, there’s also the potential that Truth Social could eventually disrupt incumbent social media platforms and transform into a financially viable business at scale. Though it has struggled against larger rivals thus far, Trump’s massive following of over 90 million combined on X and Facebook could provide a springboard.

From a trading perspective, Truth Social’s arrival has already juiced options volumes to potentially record levels. Traders loaded up on bullish call options betting on shares surging to $80 or $90 in a sign of the speculative frenzy around the stock.

Ultimately, while Truth Social’s jaw-dropping debut minted a new billionaire out of Trump, it has set the stage for a gladiator battle between bullish and bearish investors. With both immense risks and rewards, Truth Social is shaping up as the ultimate “investor Rorschach test” based on one’s convictions around Trump and his ability to create a viable media business.

Reddit’s Soaring IPO: From Online Forums to $9.5 Billion Company

Posted on by slightbourne@noblecapitalmarkets.com

The internet forum that helped launch the meme stock frenzy is now a multi-billion dollar public company itself. Reddit, the hugely popular online community made up of thousands of niche message boards, had a blockbuster stock market debut on Thursday.

Shares of Reddit, trading under the ticker RDDT on the New York Stock Exchange, skyrocketed 48% to close at $50.44, giving the company a lofty valuation of $9.5 billion. The explosive first day performance continues the hot streak for newly public tech companies in 2024 and underscores insatiable investor demand for businesses involved with artificial intelligence.

Reddit priced its initial public offering on Wednesday at $34 per share, raising around $750 million in the process with the company itself collecting $519 million. That IPO price was already at the top end of the expected range amid high demand, valuing Reddit at $6.5 billion on an exit from the private markets.

The robust valuation is a major achievement for Reddit, which was founded nearly 20 years ago in 2005 by the entrepreneur duo of Alexis Ohanian and current CEO Steve Huffman. For years, the site with its stark design and freewheeling discussion forums operated on a shoestring budget.

But Reddit’s popularity and influence exploded in recent years, fueled by the rise of viral meme culture and Internet subcultures. The company reported $804 million in revenue for 2023, up 20% from the prior year, as it started more aggressively monetizing the engaged audiences on its platform through advertising and other services.

While still unprofitable with a $90.8 million net loss last year, Reddit is now setting itself up as a major media and technology player by going public. It is the first major social platform to hit the public markets since Pinterest’s IPO in 2019.

“This is a huge milestone for Reddit and the team,” said CEO Steve Huffman, speaking to CNBC from the NYSE trading floor on the company’s debut day. “Our people and our community have built an internet culture that is now being embraced by the world.”

Reddit’s successful IPO provides an exit for some of the company’s longtime venture capital investors and big corporate backers like Tencent and Condé Nast’s parent company. But Huffman said Reddit also allocated a portion of shares in the IPO for its most devoted users and volunteer moderators who help run the site’s myriad discussion boards.

“The people make Reddit what it is,” said Huffman. “This is a chance for our most passionate folks to own a piece of that.”

Looking ahead, Reddit sees big growth potential in data licensing, particularly providing user content to artificial intelligence companies to train their language models and other software. The company revealed it has already inked data deals worth over $200 million in the next few years.

However, Reddit is facing a probe from the Federal Trade Commission over its practices of selling user data to AI firms. Regulators are examining whether proper disclosure was made to users about how their posts and comments would be monetized.

Privacy and safety issues are nothing new for Reddit, which has had to crackdown on toxic content and hate speech proliferating across its unruly message board communities. Huffman acknowledged those challenges, including the role Reddit played at the center of the meme stock mania that sent shares of GameStop and AMC soaring in bizarre market frenzies in 2021.

But as evidenced by its IPO haul, Reddit has still managed to attract both users and investors by providing an online home for all sorts of niche interests and subcultures to flourish – whether that’s stocks, cryptocurrencies, sports, hobbies, activism or adult content. And Reddit sees plenty of runway for growth by continuing to serve as the internet’s open marketplace of ideas.

“There are so many people around the world looking for their communities,” said Huffman. “We provide that, and we’re just getting started.”

Real Risks to TikTok Users

Posted on by phoffman@channelchek.com
Image: Congressional Hearings with Byte Dance (TikTok) CEO, C-SPAN (YouTube)

Should the US Ban TikTok? Can It? A Cybersecurity Expert Explains the Risks the App Poses

TikTok CEO Shou Zi Chew testified before the House Energy and Commerce Committee on March 23, 2023, amid a chorus of calls from members of Congress for the federal government to ban the Chinese-owned video social media app and reports that the Biden administration is pushing for the company’s sale.

The federal government, along with many state and foreign governments and some companies, has banned TikTok on work-provided phones. This type of ban can be effective for protecting data related to government work.

But a full ban of the app is another matter, which raises a number of questions: What data privacy risk does TikTok pose? What could the Chinese government do with data collected by the app? Is its content recommendation algorithm dangerous? And is it even possible to ban an app?

This article was republished with permission from The Conversation, a news site dedicated to sharing ideas from academic experts. It represents the research-based findings and thoughts of, Doug Jacobson, Professor of Electrical and Computer Engineering, Iowa State University.

Vacuuming Up Data

As a cybersecurity researcher, I’ve noted that every few years a new mobile app that becomes popular raises issues of security, privacy and data access.

Apps collect data for several reasons. Sometimes the data is used to improve the app for users. However, most apps collect data that the companies use in part to fund their operations. This revenue typically comes from targeting users with ads based on the data they collect. The questions this use of data raises are: Does the app need all this data? What does it do with the data? And how does it protect the data from others?

So what makes TikTok different from the likes of Pokemon-GO, Facebook or even your phone itself? TikTok’s privacy policy, which few people read, is a good place to start. Overall, the company is not particularly transparent about its practices. The document is too long to list here all the data it collects, which should be a warning.

There are a few items of interest in TikTok’s privacy policy besides the information you give them when you create an account – name, age, username, password, language, email, phone number, social media account information and profile image – that are concerning. This information includes location data, data from your clipboard, contact information, website tracking, plus all data you post and messages you send through the app. The company claims that current versions of the app do not collect GPS information from U.S. users. There has been speculation that TikTok is collecting other information, but that is hard to prove.

If most apps collect data, why is the U.S. government worried about TikTok? First, they worry about the Chinese government accessing data from its 150 million users in the U.S. There is also a concern about the algorithms used by TikTok to show content.

Data in the Chinese Government’s Hands

If the data does end up in the hands of the Chinese government, the question is how could it use the data to its benefit. The government could share it with other companies in China to help them profit, which is no different than U.S. companies sharing marketing data. The Chinese government is known for playing the long game, and data is power, so if it is collecting data, it could take years to learn how it benefits China.

One potential threat is the Chinese government using the data to spy on people, particularly people who have access to valuable information. The Justice Department is investigating TikTok’s parent company, ByteDance, for using the app to monitor U.S. journalists. The Chinese government has an extensive history of hacking U.S. government agencies and corporations, and much of that hacking has been facilitated by social engineering – the practice of using data about people to trick them into revealing more information.

The second issue that the U.S. government has raised is algorithm bias or algorithm manipulation. TikTok and most social media apps have algorithms designed to learn a user’s interests and then try to adjust the content so the user will continue to use the app. TikTok has not shared its algorithm, so it’s not clear how the app chooses a user’s content.

The algorithm could be biased in a way that influences a population to believe certain things. There are numerous allegations that TiKTok’s algorithm is biased and can reinforce negative thoughts among younger users, and be used to affect public opinion. It could be that the algorithm’s manipulative behavior is unintentional, but there is concern that the Chinese government has been using or could use the algorithm to influence people.

Meet the Management Information

Can the Government Ban an App?

If the federal government comes to the conclusion that TikTok should be banned, is it even possible to ban it for all of its 150 million existing users? Any such ban would likely start with blocking the distribution of the app through Apple’s and Google’s app stores. This might keep many users off the platform, but there are other ways to download and install apps for people who are determined to use them.

A more drastic method would be to force Apple and Google to change their phones to prevent TikTok from running. While I’m not a lawyer, I think this effort would fail due to legal challenges, which include First Amendment concerns. The bottom line is that an absolute ban will be tough to enforce.

There are also questions about how effective a ban would be even if it were possible. By some estimates, the Chinese government has already collected personal information on at least 80% of the U.S. population via various means. So a ban might limit the damage going forward to some degree, but the Chinese government has already collected a significant amount of data. The Chinese government also has access – along with anyone else with money – to the large market for personal data, which fuels calls for stronger data privacy rules.

Are You at Risk?

So as an average user, should you worry? Again, it is unclear what data ByteDance is collecting and if it can harm an individual. I believe the most significant risks are to people in power, whether it is political power or within a company. Their data and information could be used to gain access to other data or potentially compromise the organizations they are associated with.

The aspect of TikTok I find most concerning is the algorithm that decides what videos users see and how it can affect vulnerable groups, particularly young people. Independent of a ban, families should have conversions about TikTok and other social media platforms and how they can be detrimental to mental health. These conversations should focus on how to determine if the app is leading you down an unhealthy path.

Blackboxstocks (BLBX) – Unsettled Markets Impacting Results

Posted on by cpatches


Tuesday, October 18, 2022

Blackboxstocks, Inc. is a financial technology and social media hybrid platform offering real-time proprietary analytics and news for stock and options traders of all levels. Our web-based software employs “predictive technology” enhanced by artificial intelligence to find volatility and unusual market activity that may result in the rapid change in the price of a stock or option. Blackbox continuously scans the NASDAQ, New York Stock Exchange, CBOE, and all other options markets, analyzing over 10,000 stocks and up to 1,500,000 options contracts multiple times per second. We provide our users with a fully interactive social media platform that is integrated into our dashboard, enabling our users to exchange information and ideas quickly and efficiently through a common network. We recently introduced a live audio/video feature that allows our members to broadcast on their own channels to share trade strategies and market insight within the Blackbox community. Blackbox is a SaaS company with a growing base of users that spans 42 countries; current subscription fees are $99.97 per month or $959.00 annually. For more information, go to: www.blackboxstocks.com .

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

3Q22 Revenue Guidance. Late last week Blackboxstocks management announced that revenue for the third quarter, ended September 30, 2022, will be between $1.15 million and $1.25 million, which is below the $1.4 million of revenue reported in the second quarter of 2022 and would be the lowest level of reported revenue in over seven quarters.

Poor Stock Market Performance. The poor performance of the overall stock market over an extended period has impacted new customer acquisition as retail traders have become increasingly hesitant to enter the markets. However, with the new products scheduled to be released in 2023 in Stock Nanny and the Pro version of the Company’s product, we believe the products will expand on the Company’s TAM while also regaining its lost subscriber momentum.


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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.