From Loch Ness monster to Facebook trolls: time’s up for fake news
Back in the days of black and white TV and the evening news, there were still rumours that man didn’t really land on the moon; that it was all fake. Fast forward to 2019, when Facebook has declared it won’t fact check political ads, and there’s no end to the outlandish conspiracy theories social media platforms are weeding out (and publishing) every day. Misleading advertising and “fake news” is everywhere; from the pop-ups that promise we can make millions working from home, to the mind-boggling deep fakes created to shock at This Person Does Not Exist. When the term “Fake news” was crowned Collins dictionary’s Word of the Year in 2017, it was surely a sign that something had to give in the media industry. The term encapsulates the chaotic 24-hour news cycle with its sensationalist headlines and, quite often, incorrect info. So what are social media companies doing to reign in the rumours, how are they rated overall for sustainability and what are their investment prospects as a result?
Facebook Inc. FB -0.44%
Goodness score 59
Facebook’s been under the pump since October when CEO Mark Zuckerberg reiterated their company policy of not fact-checking political ads, which went down badly with most journalists and tech blogs. Facebook has long pitched itself as a laissez-faire content aggregator, rather than a publisher per se, so this position isn’t too surprising. But it looks like the industry pile-on has partly worked for Facebook critics; the company is considering lifting its microtargeting scope from just 100 users to a few thousand, in light of the recent lashings. What does all this mean for Facebook’s prospects? On the one hand Facebook Business is on a roll and quarterly earnings are up. However. they have not yet recouped the lost users from the Cambridge Analytica and Privacy scandals, which both also hit the stock price hard and if there are similar repercussions to come from their position to handling political ads a fake news 2020 by be a bumpy year.
Twitter Inc TWTR. -1.48%
Goodness score 52
Gearing up for what will no doubt be another busy Presidential Election for the O.G. microblogging platform, Twitter CEO Jack Dorsey has recently announced that ads related to elections, candidates, parties and other political content is now banned. So are ads for fundraisers, and even ones that argue for and against political content (although the fate of ads that advocate for certain causes, like the Alzheimer’s Association, are still being debated). So why is Twitter taking this blackout approach to political advertising? Based on the principle of “earned, not bought”, they claim it’s to weaken the influence of big spenders (think American super PACs) buying the election though targeted advertising. The approach to banning paid political ads should go a long way to helping them avoid the significant regulatory risk being faced by Alphabet and Facebook who are both being investigated by U.S. federal government agencies. It might even help them, sustain the strong performance seen throughout 2019 where they outperformed Facebook but lagged behind SNAP. Still, Politicians can still tweet, so we haven’t quite seen the end of “fake news” just yet.
Snap Inc, SNAP +2.19%
Goodness score 46
Distancing itself from Facebook but not going as far as Twitter, Snapchat is also taking steps to stamp out misleading political advertising. According to CEO Evan Spiegel, the company “subjects all advertising to review, including political advertising”. With a young, tech-savvy demographic, Snapchat claims its policy is creating a space for young people engage with political content online. And partly as a result it’s had a 2019 to remember. Year-to-date, Snapchat stock is up nearly 185% as the company has regained user growth momentum, sustained robust revenue growth and dramatically improved its profitability profile. With their new new unique features and gross margins sitting below the average, could their share price continue to rise in 2020?
In the News
This week we are happy to share the How to Money podcast featuring Goodments CEO, Tom Culver discussing micro-investing for beginer, how to get started buying shares and filtering companies based on your values.
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