The Next Social Media Winner…

Let’s begin the new quarter with an important question:

Should a federal court allow the President of the United States to block people on Twitter?

Trump and his lawyers are looking to overturn a ruling that says the president is not allowed to block his detractors on Twitter Inc. (NYSE:TWTR), arguing that the president tweets from his personal account, and therefore can use it however he sees fit.

Before a judge deemed Trump’s account a “public forum” last year, the president could block detractors from tweeting to him or seeing his tweets. The courts say Trump blocking his critics is a violation of First Amendment rights, Bloomberg reports, while some especially sensitive tweeters have even sued Trump for blocking them.

But the ability to block critics could be the least of Trump’s worries if Twitter moves forward with new policies regarding so-called offensive tweets.

“The next time a politician, dignitary — or perhaps a president — makes an utterance that violates Twitter standards, the message might be accompanied by a note that expands on the 280-character tweet,” the Washington Post reports.

In an attempt to curb harassment and hate speech, Twitter is considering labeling “offensive tweets that break its rules but remain in the public interest,” Twitter’s head of legal, policy, and trust and safety Vijaya Gadde told the Post last week.

It’s no secret that Silicon Valley leans hard to the left. But I don’t think it’s in Twitter’s best interest to put a lid on its most prolific user.

Interestingly enough, these revelations haven’t hurt Twitter shares. While its longer-term chart remains a choppy mess, the stock continues to recover from the damage inflicted by its February earnings disaster. Friday’s close left shares just below their post-earnings highs.

TWTR

Even so, Twitter has been in disarray after topping out above $45 last summer. The bulls still have more work to do to set this stock up for a viable short-term trading opportunity.

In other social media news, Facebook is in trouble (again) for supposedly allowing discriminatory practices in advertising.

The ACLU already sued Facebook Inc. (NASDAQ:FB). Now, the Department of Housing and Urban Development is taking aim at the social media giant with a fresh discrimination charge.

HUD claims Facebook’s tools allowed advertisers and landlords to cater housing ads based on location, gender, race, and ethnicity, according to CNBC. The lawsuit by the ACLU already prompted Facebook to ditch these advertiser tools. But now the government wants Facebook to pay up.

Now, in a move to get out in front of the bad press, CEO Mark Zuckerberg wrote an op-ed in the Washington Post calling for more government regulation of Facebook and other major tech firms.

Do shareholders care?

The never-ending drama isn’t dissuading Facebook buyers. The stock has maintained its earnings gap over the past two months, and shares continue to show year-to-date gains north of 25%, compared to a gain of just 16% in the Nasdaq Composite over the same timeframe.

FB

As Facebook and Twitter shares shrug off bad news, are we finally moving beyond the worst controversies in the social media space?

Maybe. Just check out Snap Inc. (NYSE:SNAP) as the stock continues to take full advantage of its timely earnings beat.

As I highlighted back in February, Snapchat’s daily active user count stabilized during the fourth quarter. That metric alone was enough to help juice shares by more than 20% after SNAP reported earnings.

In the blink of an eye, SNAP became one of the fastest moving stocks on the market. As of Friday’s close, the stock has doubled year-to-date. Not only is the stock potentially setting up for another powerful rally, it also still has a ton of ground to make up following its disastrous 2018 campaign.

SNAP

The social media upstart still needs to innovate and continue to hang onto its user base to stay relevant. But from a pure momentum standpoint, you can’t do much better right now.

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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