Chicago, IL – January 30, 2023 – Today, Zacks Investment Ideas feature highlights Meta Platforms META, Alphabet GOOGL, Snap Inc SNAP, Oracle ORCL and Global Social Media ETF SOCL.
TikTok Ban Coming: 3 Stocks That Would Benefit
The Social Media Landscape Is Evolving
The social media landscape has changed dramatically over the past few years with the rapid ascent of the personalized video platform app TikTok. Despite TikTok’s rapid rise, Meta Platforms and Alphabet are still the dominant players. In terms of monthly active users, three Meta platforms make up the top four rankings globally: Facebook (#1), Whatsapp (#3), and Instagram (#4).
Alphabet holds the second spot with its video platform Youtube and TikTok is ranked #6. Even with the continued dominance of existing players like META and GOOGL, stock performance has been lackluster in recent years. The Global Social Media ETF is the most followed social media ETF (note that it does not include TikTok).
What has Led to the Underperformance of Existing Players?
For one, Meta CEO Mark Zuckerberg is paying less attention to his lucrative social media business and instead investing valuable resources in what he sees as the future – the metaverse. Approximately 20% of Meta’s current investments are aimed at this project. While the bold bet has not panned out for Zuckerberg and Meta yet, he plans to stay the course.
The other major factor leading to the underperformance in domestic social media platforms such as Instagram, Youtube, and Snap Inc’s Snap Chat platform is TikTok’s success.
Chinese-based ByteDance launched TikTok in the United States in 2016, and since then, the platform has dominated. The app, which allows users to create and modify short-form videos, has caught on, especially with the younger generation. TikTok’s competitors have noticed. To win eyes back, Instagram has launched “Reels” and Youtube has created “Shorts” –aimed at users who prefer short, customizable videos like Tik Tok.
SnapChat, already in the short video space, has suffered the most from TikTok’s rise.
National Security Concerns
Though TikTok is one of the dominant global social media players and shows little signs of slowing growth – other factors may play a significant role in the social media space moving forward. Concerns are growing that ByteDance is collecting unnecessary personal data on its users and possibly supplying it to the Chinese government (the biggest rival of the U.S.).
Former President Donald Trump attempted to ban TikTok in 2020, but ultimately the app was able to remain active. The Biden administration struck down the potential Trump ban on TikTok but ordered a national security investigation.
A Potential Catalyst for Domestic Social Media Platforms
Even with the failed TikTok bans of the past, momentum is growing for a new possible attempted ban. In the past year, FBI director Christopher Wray, FCC Commissioner Brendan Carr, and Senator Josh Hawley have called for a domestic TikTok ban. Meanwhile, several U.S. colleges have implemented their own bans (via WiFi) amid security concerns.
Tuesday, Josh Hawley announced he would introduce a bill to ban the app. Investors who follow the social media space should keep a close eye on how the efforts to ban the app play out. If the app is ultimately banned, SNAP will benefit the most, along with META and GOOGL. Software giant Oracle, which supports TikTok via its cloud platform, would stand to lose.
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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
