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Are Hard-Hit Social-Media Stocks a Buy for Investors? – Morningstar.ca

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Meta Platform’s (FB) mixed earnings results and stock slide is pulling down other social media shares, and in the process pushing them further into undervalued territory. Twitter (TWTR) , Snap (SNAP), and Pinterest (PINS) have each taken a hit Thursday along with a more than 25% dive in Meta, Facebook’s parent company.

However, these social media stocks are also deeply undervalued by Morningstar’s valuation metrics. Even before Thursdays sell off, Snap and Pinterest were in 5-star territory, the level considered the most under valued in our Star Rating system for stocks.

Exhibit 1

The revenue headwinds facing social media stocks are most likely short term, says Morningstar senior equity analyst Ali Mogharabi. “With that, their top-line growth will still be impressive (mainly PINS and SNAP).”

“FB is of course maturing and with already billions of users, a much higher rev growth deceleration is expected,” he says. “Even with margin pressure as it invests in new products (metaverse, etc.), 30-35% operating margin is impressive. And I think those margins can expand in 2023 when higher demand for ads in Reels drive up ad prices (as mentioned in the note), either stopping or maybe even reversing the slowdown in ad rev growth, which will also help margins.”

Michael Hodel, director of equity research, media & telecom at Morningstar, notes that one of the unknowns hamstringing these stocks is whether online time will increase at anything close to the same rate it has over the past couple years, especially in developed markets. “That at leaves FB and its peers looking to steadily increase ad effectiveness to help push ad prices higher. To me, this is the million dollar question: will data privacy policy changes at Apple, etc. or increased regulation offset any effort to improve ad formats and targeting mechanisms over time?”

Here are some highlights from Mogharabi’s recent commentary on Twitter, Snap and Pinterest. Mogharabi’s note take on Meta can be found here.  

Exhibit 2

Twitter

“Twitter has captured the attention of nearly 200 million daily active users, including prominent celebrities and public figures worldwide. Its access to, and interactions around, real-time information and content create value for its users and for advertisers. While Twitter user growth has accelerated since 2018, a potential slowdown remains a concern. Slower user growth could make higher user monetization more difficult as advertisers may allocate a bit more toward other platforms such as Snap, which has a faster-growing user base. We do not believe that Twitter has carved out an economic moat.

Our fair value estimate is $58 per share, equivalent to 2021 enterprise value/adjusted EBITDA and enterprise value/sales ratios of 27 and 8, respectively. The ad market appears to have rebounded from the pandemic faster than we had expected, though we expect Twitter will continue to lag its peers in attracting direct response ad dollars. Top-of-the-funnel ad campaigns should continue to help, though, especially as live events such as sports return. We project modest growth in Twitter’s user base, due to the established presence of larger social networks such as Meta and Instagram and faster-growing ones such as Snapchat and Pinterest. As engagement improves, we think Twitter will be able to attract its fair share of ad dollars.”

Snap

“Snapchat, which has captured 265 million users to date, most of whom are between the ages of 18 and 24. We believe that Snap and its users benefit from a network effect among its customer base and is starting to attract the attention (and dollars) of advertisers with a growth trajectory toward nearly $3.8 billion in revenue. However, there is no guarantee that Snap will effectively monetize these users consistently. In turn, we are not yet convinced about the firm’s ability to generate excess returns on capital over the next decade. Ultimately, Snap’s competition, which includes wide-moat Facebook with 2.8 billion users, is overwhelming, in our view. In particular, Instagram, owned by Facebook, may emerge as a substitute for Snapchat. The larger ecosystems of Snap’s competitors may have also created somewhat of an exit barrier for their users, which we think could further limit the growth acceleration of Snapchat users. In addition, growth in new users, user engagement, and time spent on Snapchat may face a natural limit in the long run as customers only have so much time to give to various mobile app interactions each day. TikTok, a video-sharing firm with China’s ByteDance as its parent company, is another formidable competitor of Snap.

Our fair value estimate for Snap is $70 per share, which represents an enterprise value/sales multiple of 20 in 2022. We project tremendous revenue growth for Snap at a 10-year average rate of 30%. Within our discounted cash flow model’s initial 10-year projection, we have assumed that Snap will become profitable in 2023 and will improve its current operating loss to an operating margin of 40% by 2030. Snap’s revenue growth will be driven primarily by growth in the firm’s daily active users, or DAUs, user engagement, overall online advertising spending, more adoption of the augmented reality ad format, and an increasing allocation of online ad dollars toward mobile and social network ads, in addition to the firm’s more aggressive monetization of Snap Map, Communication (chat, minis, and games), and camera. We expect recovery from COVID-19 to further boost top-line growth.”

Pinterest

“Pinterest, an online product and idea discovery company, is focused on carving out a piece of the global digital advertising space. While we don’t expect Pinterest to displace online advertising behemoths Google and Meta or up-and-coming Amazon, we do expect it to attract a small pinch of digital ad spending, which we estimate is an addressable market of more than $600 billion.

Pinterest has a narrow economic moat and stable moat trend based on network effects and intangible assets (data), which we think can eventually drive the company to profitability and excess returns on invested capital. With more than 475 million average monthly users who access Pinterest with the intention of not only discovering ideas or products but also purchasing them immediately or in the future, we think the firm can attract more online ad dollars. In our view, Pinterest can attract various types of ad campaigns through the marketing funnel–from broad exposure or awareness to targeting and actual conversion. We think opportunities exist for the firm to gradually increase its share of the U.S. digital advertising market, as well as grow internationally (mainly in Europe) in terms of both users and ad dollars collected from this audience

We expect higher user growth in 2022 and beyond as the impact of the pandemic, which pulled user growth forward, will be lapped. We also expect the firm’s latest offerings that attract content creators and improve users’ shopping and purchasing experiences on the platform to drive user growth. In addition, we think some advertisers will come back after macro issues related to supply chain and labor shortage are resolved. Plus, as expected, Apple’s policies appear to have hit Pinterest less than some of its peers. Until then, however, we now assume a further decline in U.S. users and a deceleration in overall user growth for Pinterest during the remainder of (2021). In our view, narrow-moat Pinterest remains attractive. We also think after the return of consistent and stable user growth to the platform the firm may become an acquisition target again.”

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S.Korean leader's informal media events are a break with tradition – SaltWire Halifax powered by The Chronicle Herald

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By Soo-hyang Choi

SEOUL (Reuters) – South Korean leader Yoon Suk-yeol has departed from years of tradition by holding informal daily media events to field questions on topics ranging from inflation and ties with neighbouring North Korea to the first lady and even boyband BTS.

Such wide-ranging access to the president was previously unheard of. It stems from Yoon’s decision to move his office out of the official Blue House, whose previous occupants largely steered clear of such interactions over more than seven decades.

“It’s apparently helping Yoon dispel worries about his lack of political experience and giving him a sense of where public opinion is at,” said Eom Kyeong-young, a political commentator based in the capital, Seoul.

Yoon, a former prosecutor-general, entered politics just a year ago, before winning the presidency in March by a margin of just 0.7%, the narrowest in South Korea’s history.

Upon his inauguration in May, Yoon moved the presidential office to the compound of South Korea’s defence ministry, describing the official residence as the symbol of an “imperial presidency”, and vowing not to “hide behind” his aides.

His liberal predecessor, Moon Jae-in, had rarely held news conferences, and almost always filtered his communication with the media, and the public, through layers of secretaries.

Analysts see Yoon’s daily freewheeling sessions as part of a broader communications strategy that lets him drive policy initiatives and present himself as a confident, approachable leader.

The campaign has also allayed public suspicions about the newcomer to politics, they say.

Polls show the new strategy helping to win support and much-needed political capital for Yoon in his effort to hasten recovery from the COVID-19 pandemic, in a parliament dominated by the opposition Democratic Party.

Although Yoon’s approval rating dipped to 47.6% in a recent survey, slightly lower than the disapproval figure of 47.9%, another June poll showed communication was the reason most frequently cited by those who favoured him.

“The sweeping victory of Yoon’s conservative party in June local elections shows the public is not so much against the new administration,” said Eom.

Incumbents from Yoon’s People Power Party (PPP) defeated challengers for the posts of mayor in the two biggest cities of Seoul and the port city of Busan in that contest, while its candidates won five of seven parliamentary seats.

Eom attributed Yoon’s low approval rating from the beginning of his term to inflation risks that threaten to undermine an economic recovery and his lack of a support base as a new politician.

But some critics say Yoon’s sessions raise the chances that he could make mistakes.

“He could make one mistake a day,” Yun Kun-young of the opposition party wrote on Facebook last week, saying the new practice could be “the biggest risk factor” for the government.

The presidential office could not immediately be reached for comment.

Yoon has already faced criticism for controversial remarks made during the morning briefings, such as one in defence of his nominee for education minister, who has a record of driving under the influence of alcohol years ago.

But the daily meetings and public reaction would ultimately help the government to shape policy better, said Shin Yul, a professor of political science at Myongji University in Seoul.

“It might be burdensome for his aides for now, but will be an advantage in the long term,” Shin said. “A slip of the tongue cannot be a bigger problem than a policy failure.”

(Reporting by Soo-hyang Choi; Editing by Clarence Fernandez)

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Angolan ex-leader dos Santos in intensive care: Portuguese media – Al Jazeera English

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Dos Santos, 79, has been receiving medical treatment since 2019. He was president of Angola between 1979 and 2017.

Former Angolan President Jose Eduardo dos Santos, who ruled Africa’s second-biggest oil producer for nearly four decades, is in intensive care at a clinic in Barcelona, Portuguese news agency Lusa has reported, citing a source close to him.

Dos Santos, 79, has been receiving medical treatment since 2019, but his health deteriorated and he was admitted to an intensive care unit, Lusa reported, without saying when it happened.

After a 38-year stint in office that made him one of Africa’s longest-serving leaders, dos Santos stepped down in 2017. His rule was marked by a brutal civil war lasting nearly three decades against the United States-backed UNITA rebels – which he won in 2002 – and a subsequent oil-fuelled boom that enriched elites but did little to alleviate widespread poverty.

He was replaced by Joao Lourenco, who despite being from dos Santos’s People’s Movement for the Liberation of Angola (MPLA), swiftly moved to investigate the allegations of multibillion-dollar corruption during the latter’s stint, targeting the former leader’s children.

The assets of his daughter Isabel dos Santos, often feted as Africa’s richest woman with an estimated worth of $3.5bn as of 2013, have also been frozen by the Angolan government.

Last year, the elder dos Santos returned home for the first time since he went into exile in Barcelona in April 2019.

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Media Release – June 24, 2022 – Guelph Police – guelphpolice.ca

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Males arrested, drugs and stolen property seized

A large quantity of suspected stolen property and drugs were seized following the arrests Thursday of three Guelph males.

The males were arrested as a result of an ongoing investigation by members of the Guelph Police Service Break Enter Auto Theft (BEAT) Unit. Two of the males were arrested following a vehicle stop, during which police seized quantities of crack cocaine, methamphetamines and hydromorphone, as well as drug packaging and digital scales. Also located in the vehicle was suspected stolen property including power tools and gym equipment and break-in tools including pry bars.

A search of the males’ Waterloo Avenue residence revealed more suspected stolen property including high-end bicycles and several toolboxes or bags full of tools.

Three Guelph males — aged 33, 35 and 55 – face charges including possession for the purpose of trafficking, break and enter, possession of stolen property over $5,000, possessing break and enter tools and possessing identity documents. All three were held for bail hearings Friday.

recovered stolen property

Cash stolen during business break-in

The Guelph Police Service is investigating after cash was stolen from the office of a local business early Friday.

Approximately 3:20 a.m. police were called to a business on Woolwich Street near Speedvale Avenue West. The owner was reporting a break-in two hours earlier.

Video surveillance showed a male arriving at the business approximately 1:15 a.m. and using a tool to pry open a door. He attended an office where he pried open a second door and emptied the safe. He was described as wearing a black hoodie with the hood up, blue jeans, white and grey shoes, black gloves and a black backpack.

Anyone with information about the incident is asked to call Constable Mallory Woeller at 519-824-1212, ext. 7462, email her at mwoeller@guelphpolice.ca, leave an anonymous message for Crime Stoppers at 1-800-222-8477 (TIPS) or leave an anonymous tip online at www.csgw.tips.

Toronto-area males arrested on drug charges

Three Toronto-area males, including one youth, were arrested on drug charges Thursday in Guelph.

Approximately 2:15 p.m., a Guelph Police Service officer observed a silver BMW cutting off other vehicles in the area of Wellington Street West and Wyndham Street South. A traffic stop was conducted and officers could detect a strong smell of cannabis coming from within the vehicle.

A search of the vehicle uncovered an open package of cannabis in the glovebox and a grinder contaminated with cannabis residue in the cupholder, as well as 85 Percocet tablets in the console and more than $1,700 cash inside a lunch bag.

A 22-year-old Toronto male, a 22-year-old Mississauga male and a 17-year-old Mississauga male are all charged with possessing controlled substances for the purpose of trafficking. They were all released with August court dates. The BMW, which had been rented through a car-sharing app, was towed by police.

Total calls for service in the last 24 hours – 256

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