Shou Zi Chew has already experienced a lot. Born in Singapore, the 40-year-old graduated from an elite national school and went on to study at University College London and Harvard University in the United States. After two years at Goldman Sachs, his professional career took the high-flyer to the Chinese technology sector. Chew has been at the helm of Tiktok since May 2021. Most recently, the CEO of the short video platform probably experienced one of his toughest days. For more than five hours, he was grilled by the Energy and Commerce Committee of the House of Representatives in the US Congress. The U.S. parliamentarians accused Tiktok of data espionage, manipulation and endangering the health of young people in sometimes heated tirades. Now more than ever, a ban on the social media portal or the forced sale of its U.S. activities with around 150 million users is on the cards. However, the legal hurdles for such a step are still high.
Either way, sanctions of any kind would play into the hands of the competition. "For Meta and CEO Mark Zuckerberg, as well as Snapchat and Google, today's hearing was like a good movie complete with popcorn," Wedbush analyst Dan Ives wrote in a commentary. He called Shou Zi Chew's statements a disaster moment. The analyst would assess restrictions on Tiktok as positive for Meta and Snap. The positive price performance of the two companies on the day of the hearing speaks for this thesis. Meta Platforms, in particular, has been hard at work with investors for some time. So far this year, the stock market value of the social media giant has expanded by more than 70%. Already, the company is mimicking Tiktok to some extent on its Facebook and Instagram platforms. Meta invests heavily in the creation and distribution of short videos (reels). At the recent financials presentation, Mark Zuckerberg cited advances in these services, as well as in the field of artificial intelligence, as growth drivers.
In terms of reach, Meta Platforms is the measure of all things anyway. In its quarterly report, the group reports, among other things, the "Family Daily Active People", or DAP for short. This is the number of users who visit at least one of the following portals on a given day: Facebook, Instagram, Messenger, WhatsApp. By the end of 2022, DAP was approaching the 3 billion mark (see chart). The digital omnipresence could not change the fact that Meta felt the restraint of many advertising customers last year and at the same time had to struggle with rising costs. This mix caused the group's 2022 profit to plunge 41% to USD 23.2 billion. Nevertheless, many investors pressed the "Like" button on the most recent number day. Mark Zuckerberg provided enthusiasm with an optimistic outlook. He expects a recovery in the advertising business and at the same time plans stricter cost control. The announcement of additional share buybacks in the volume of USD 40 billion rounded off the positive news.
Not only in terms of performance, but also in terms of volatility, Meta Platforms currently stands out from the broad Wall Street crowd. In the first quarter of 2023 that is coming to an end, the stock's price volatility has reached more than 50%. This means the large cap has moved up and down more than twice compared to the Nasdaq Composite Index. Softcallable barrier reverse convertibles allow investors to translate handsome volatility into attractive risk-reward profiles. A Meta Platforms based new issue in USD pays a coupon of 17% p.a. In the product currency CHF, the guaranteed payout is 14% annually. Also new to the market is a multi-variant: here Meta comes together with Google and YouTube parent Alphabet as well as Snap. The social media trio enables a coupon payment of 22% p.a. Each of the three BRCs enters the term of maximum 15 months with a barrier of 59% of the initial fixing. As long as no underlying falls to or below this level, the respective maximum return is fixed. If the cushion is not sufficient, the partial protection expires. Then the investment would be directly linked to the progress of Meta Platforms respectively in the case of the multi-product of the weakest underlying. Please also note the soft callable feature. Leonteq can terminate the BRC prematurely. If the issuer makes use of this option, investors would receive the full nominal and the pro-rata coupon.
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