Google, Meta, and Snap would be the biggest winners if TikTok is banned, with shares set to rise on billions in new ad revenue, CFRA says
- Some US lawmakers are working to ban TikTok. That would be a boon to Snap, Meta, and Google, CFRA says.
- The research firm says TikTok could make $9 billion-$10 billion in US revenue in 2024.
Millions of Americans will have to say goodbye to TikTok if US lawmakers successfully ban the China-based social media platform. However, Snap, Meta, and Google parent Alphabet would be the biggest beneficiaries, with billions of dollars of TikTok's ad revenue up for grabs, said research firm CFRA.
"Shares of select social media companies could have room to rise on a potential TikTok ban that could be gaining traction from Congress," senior equity analyst Angelo Zino at CFRA wrote in a research note published Tuesday.
"We place less than a 50% probability that TikTok will be banned by the end of 2024," Zino said. "Still, our probability of a ban has gone up significantly over the last six months."
Snap shares soared 9.5% on Monday after Senator Mark Warner of Virginia, who heads the US Senate Intelligence Committee, told Fox News he would introduce a bipartisan bill allowing the government to ban foreign technology from China and other potential US adversaries. TikTok, owned by Chinese company ByteDance, says it has 100 million users in the US.
Warner, Republican Senator John Thune of South Dakota, and other lawmakers on Tuesday introduced the RESTRICT Act, saying TikTok and other Chinese technology pose national security risks through data collection and other means.
TikTok, known for delivering viral content through short videos, looks set to rake in $7 billion in US revenue this year and about $9 billion-$10 billion in 2024, CFRA said. TikTok going dark in the US offers social media companies potential earnings leverage and upside to consensus estimates at a time when they've been cutting costs.
"A TikTok ban would move the needle more for SNAP than others," said Zino. TikTok's projected US revenue for 2023 is roughly 1.5 times the total revenue level for Snap.
"However, given how similar the demographic of the installed base of both TikTok and SNAP are, should SNAP just capture $550 million of this figure (we view this as conservative), based on 2024 expected revenue, it would add about 10 percentage points to the company's top-line."
Zino said growth at Google's YouTube could be accelerated as that platform's engagement levels and user base is the most attractive option for advertisers. "For META, its scale may not make it a huge beneficiary immediately, but it will be a major beneficiary of TikTok just exiting its most important market."
A TikTok spokesperson told CNN that a US government ban of its app would limit American speech. The legislation would be "a ban on the export of American culture and values to the billion-plus people who use our service worldwide," the spokesperson told CNN.
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