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SA Asks: How would META fare if it lost Instagram, WhatsApp? (00:25) China bans use of ‘smart driving’ terms in auto ads. (02:56) McDonald’s (MCD) is bringing back its popular Snack Wrap menu item this year. (03:54)
This is an abridged transcript.
Less than a week into a trial that is expected to last up to two months, analysts are weighing what could happen to Meta Platforms if forced to divest Instagram and WhatsApp.
Meta Platforms (NASDAQ:META) is currently embroiled in antitrust litigation with the FTC over its takeovers of Instagram and WhatsApp, which it acquired in 2012 and 2014, respectively.
Opening arguments in the case were presented before a federal court on Monday. If Meta (NASDAQ:META) loses, it may be ordered to divest itself of one or both of the hugely popular services.
How would Meta (META) fare without Instagram and/or WhatsApp? Seeking Alpha analysts UFD Capital and Nexus Research weigh in.
UFD Capital: We believe that Meta (META) could survive losing Instagram and/or WhatsApp. These days, Meta (META) functions more like a holding company, and it’s our opinion that much of the value they generate over the coming years will be from new initiatives rather than iterations on their existing platforms. Losing one or more of these platforms will be detrimental, but probably not the end of the world.
What is less certain is whether Instagram and WhatsApp would thrive on their own. Instagram can stand alone just fine, but will be less efficient at serving ads without cross-platform data from Meta (META). Despite a massive user base, WhatsApp monetization has been relatively slow. WhatsApp represents a potential opportunity for Meta (META); however, the app may not be able to monetize very well on its own.
We believe that whatever the outcome of the FTC case is, investors will not suffer too much over the long term. A potential upside scenario is the possibility that the sum of the parts is worth more than the whole, but for a tech company of this nature that is unlikely.
Nexus Research: It would be a major blow to the company, given how much Instagram contributes to Meta’s (META) total revenue (48.4% in 2024), and how WhatsApp is currently the most promising channel for “Meta AI” usage and automated business messaging (or “Business AIs”).
The possibility of Meta (META) having to break off Instagram and WhatsApp is likely to weigh on stock price performance going forward. And that is on top of the fact that President Trump is keen to sustain the operations of TikTok in the U.S., throwing cold water on the bullish narrative that Meta (META) could benefit from the ban of the Chinese social media app. The Trump administration’s regulatory stance is certainly not in Meta’s (META) favor at the moment.
China has implemented a ban on the use of terms such as “smart driving” and “autonomous driving” in automotive advertisements.
The move follows a fatal accident involving a Xiaomi (OTCPK:XIACF) (OTCPK:XIACY) SU7 sedan and is part of a broader crackdown of advanced driving assistance systems and related technologies.
Automakers are prohibited from using marketing terms like “smart driving,” “autonomous driving,” “automatic driving,” “intelligent driving,” or “advanced intelligent driving” in promotional materials. Instead, manufacturers must use precise terminology, such as “L(number) assisted driving,” which corresponds to the internationally recognized levels of driving automation.
The mandate on vehicle advertising was delivered by the Ministry of Industry and Information Technology on Wednesday. The revised rule also prohibits automakers from testing and enhancing their ADAS through remote software upgrades for cars that have already been delivered to customers.
McDonald’s (NYSE:MCD) plans to bring back its popular Snack Wrap menu item sometime this year,
In a cryptic social media post, the restaurant chain teased that the launch would be on the 14th, but did not specify which month.
The Snack Wrap, which has been off the McDonald’s (NYSE:MCD) menu for almost a decade, was first introduced in the United States in 2006 and quickly became a fan favorite.
Over the last five years, various social media posts asking McDonald’s (MCD) to bring back Snack Wrap have gone viral.
Despite the popularity of Snack Wrap, the restaurant chain discontinued it in 2016 due mainly to operational inefficiencies. The assembly process was considered too time-consuming for the chain’s fast-paced kitchens, and the wrap ultimately didn’t meet internal sales expectations.
The revived Snack Wrap is expected to feature some updates.
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Catalyst watch:
Now let’s take a look at the markets ahead of the opening bell. Dow, S&P and Nasdaq futures are in the green. Crude oil is up 1% at $63/barrel. Bitcoin is up 0.5% at $84,000. Gold is down 0.8% at $3,322.
In the world markets, the FTSE 100 is down 0.6% and the DAX is flat.
The biggest movers for the day premarket: MongoDB (NASDAQ:MDB) +2.5% – Shares edged higher after Redburn upgraded the database software provider to Neutral from Sell, citing limited downside risk.
On today’s economic calendar:
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