Tech Stock Roundup: UK Social Media Law Hits Stocks, Netflix 11%, and Tesla’s Earnings
Key Takeaways
- Social media stocks react to the U.K.’s Online Safety Act.
- Analysts don’t seem disappointed by Meta’s layoff announcement.
- Netflix shares jumped 11% before the weekend close.
- All tech eyes will turn on Tesla’s third-quarter earnings release this week.
A new law governing social media content in the U.K. and a layoff announcement from Meta impacted tech stocks last week.
Investors are looking closely at Alphabet v. Epic Games and Tesla’s third-quarter results.
Social Media Stocks React to Safety Rules
Ofcom, the U.K.’s communications watchdog, has warned that leading social media platforms could face substantial penalties for non-compliance with the Online Safety Act.
U.K. social media companies could face significant fines if they fail to adequately protect children on their platforms.
The Online Safety Act, designed to protect users from harmful content online, will introduce strict rules for messaging services and social media platforms. Ofcom’s CEO, Dame Melanie Dawes, reiterated the responsibility of social media companies to ensure user safety.
Meanwhile, leading social media companies in the U.S. are already facing legal battles for their role in promoting mental health issues.
Meta, TikTok, YouTube, and Snapchat have been accused of prioritizing addictive content in lawsuits filed by multiple U.S. states. The U.S. government’s crackdown on these platforms reflects growing concerns about the impact of social media on mental health.
Meta Hit by Layoff News
Meta’s stock declined last week. News impacting shares include the beginning of its fifth round of layoffs since CEO Zuckerberg declared the company’s “year of efficiency” in 2022.
Meta’s fresh round of layoffs impacts employees across various departments.
The company has confirmed job cuts in WhatsApp, Instagram, and Reality Labs, its Metaverse division. While the exact number of employees affected remains unclear, reports suggest that this round of layoffs is less extensive than previous ones.
Meta attributed the job cuts to realigning resources to meet long-term strategic goals and location strategies.
In 2022, Meta laid off over 11,000 employees. The company continued to reduce its workforce in early 2023, with an additional 10,000 job cuts announced between March and April.
Meta is not alone in this trend. The tech industry has experienced widespread downsizing, with companies like Amazon, Google, and Microsoft laying off tens of thousands of employees since 2022.
Despite these layoffs, analysts remain optimistic about Meta’s future. Based on recent Wall Street forecasts, the average price target for Meta Platforms is $624.12, suggesting a potential 8.27% increase from its current price.
Netflix Soars on Strong Earnings and New Subscribers
Netflix’s strong third-quarter performance has propelled its stock price to near-record highs, exceeding market expectations across all key metrics, including subscriber growth, revenue, and profitability.
Following the earnings report, the company’s shares surged by nearly 11% on Friday to 5.4% at $763.89 per share.
Several factors contributed to this success. The ad-supported membership option has experienced significant growth, boosting both revenue and the subscriber base.
Netflix’s crackdown on password sharing and focus on original titles has also led to a marked increase in subscribers.
Despite these positive results, concerns about overvaluation have emerged, given the substantial rise in Netflix’s stock price. Starting in 2025, the company announced it will stop reporting subscriber growth numbers and will instead focus on more traditional metrics such as profit margin and revenue growth.
In the third quarter, Netflix reported a 15% year-over-year increase in revenue, surpassing analyst expectations , while its operating margin also saw improvement.
Alphabet Movement After Epic Games Update
A U.S. judge granted Google a temporary reprieve from implementing antitrust remedies ordered in a case brought by Epic Games.
The decision suspends Google’s Nov. 1 deadline for opening Android-powered smartphones to rival app stores. The ruling comes as an appeals court considers permanently blocking the order, which stems from Epic Games’ argument that Google’s Android Play store is an illegal monopoly.
Google expressed satisfaction with the judge’s decision, stating that Epic’s remedies were dangerous and threatened the safety and security of the Android Play store. The company plans to continue its legal defense.
In response , Epic Games argued that Google’s appeal was “meritless” and that the temporary pause was merely a procedural step.
The Android operating system commands around 70% of the global smartphone market, placing Google under scrutiny for its dominance.
Although Epic lost a similar case against Apple, the ruling against Google could significantly impact the mobile app market.
Both Apple and Google maintained that their app store commissions are standard in the industry. They cited benefits like reach, security, and malware detection.
Alphabet shares have shown no relevant impact so far, decreasing by 0.3% in Monday’s pre-market session to $165,05.
Tesla’s Q3 Earnings
The biggest event to monitor this week is Tesla‘s third-quarter earnings release, scheduled for Wednesday, Oct. 23.
Analysts expect the electric vehicle giant to report earnings of 58 cents per share and revenues of $25.57 billion. While Tesla’s second-quarter earnings declined and missed expectations, the consensus estimate for third-quarter earnings has recently improved.
Tesla’s third-quarter deliveries exceeded expectations, reaching 462,890 units worldwide. However, the company’s aggressive price cuts and high production costs are expected to pressure margins. The automotive gross margin is projected to decrease by 40 basis points compared to the previous year.
The Energy Generation and Storage business has been a bright spot for Tesla, with strong growth in its Megapack and Powerwall products. The company’s energy storage deployment reached 6.9 GWh in the third quarter, a 73.3% increase year over year. This segment is expected to contribute significantly to Tesla’s overall results.
While Tesla’s automotive business faces margin pressures, its strong growth in the Energy Generation and Storage segment will likely support overall profitability. Investors will closely watch Tesla’s earnings report for insights into the company’s prospects.
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