According to CFRA, investors believe that the proposal to ban TikTok in America will benefit rivals such as Snapchat, Google, and Meta, with billions of dollars in TikTok ad revenue up for grabs.
Angelo Zino, senior equity analyst CFRA Research, says that the “biggest beneficiaries of a TikTok ban” would be Snapchat, Facebook-parent Meta, and YouTube. “TikTok’s emphasis on short-form videos has increased engagement/time spent by consumers and has upended the entire industry, creating a headwind for META/SNAP,” Zino wrote. “Given TikTok’s growing engagement/user growth, it has been taking an increasing portion of the digital ad dollars pie from other social media players.”
Snap shares rose 9.5% on Monday after Virginia Senator Mark Warner, chairman of the US Senate Intelligence Committee, told Fox News that he would introduce a bipartisan bill allowing the government to prohibit foreign technology from China and other potential US adversaries.
After years of speculation about a TikTok ban due to security concerns about its Chinese parent company, ByteDance, the stock sharp rise indicates that some on Wall Street are taking the prospect of a TikTok ban more intensely. It also shows how lawmakers’ interventions to tackle TikTok’s potential threat may profit large US tech platforms, including dominant companies.
Zino believes that growth at Google’s YouTube could be accelerated because the platform’s engagement levels and user base make it the most appealing option for advertisers, and that a TikTok ban would have a greater impact on Snapchat than others.
The sources for this piece include an article in BusinessInsider.