The three American companies tacked on US$47 billion in market capitalisation Thursday as Congress upped the pressure on security concerns posed by TikTok.
America’s social media landscape could soon change dramatically.
A trio of American technology giants could add some US$431 billion in market value if the US bans TikTok, according to Bernstein analysis published Thursday, as the issues posed by the wildly popular Chinese-owned social media app take centre stage in Washington.
Key Facts
Alphabet, Meta, and Snap, each of which operate short-form video platforms rivaling TikTok, would all be in line for major stock jumps if the U.S. moves forward with a TikTok shutdown, according to a note to clients Thursday from Bernstein analysts led by Mark Shmulik.
Shares of YouTube Shorts parent Alphabet could jump as much as 20% should TikTok users need to flock to a replacement for their social media fix, shares of Instagram Reels parent Meta could be in line for as much as a 30% gain and shares of Snapchat Spotlight parent Snap could surge as much as 50%, according to Bernstein forecasts, using price-to-earnings multiple data for companies who benefitted from similar previous bans in China and India as a guide.
Those gains would represent US$267 billion, US$155 billion and US$9 billion respective market capitalisation increases for Alphabet, Meta and Snap from Wednesday share prices.
Related
The three stocks already benefited Thursday as TikTok’s CEO and China rejected the premise of a forced sale of TikTok by its Chinese parent company ByteDance and TikTok’s CEO testified before Congress to defend his company amid national security and information privacy concerns, with Snap, Meta and Alphabet ticking up about 3% – a nearly $50 billion jump in market value for the trio by 1:30 p.m. ET.
Snap and Meta would be the “clear beneficiaries” of a TikTok ban, Wedbush analyst Dan Ives wrote in a Wednesday note, also predicting such a ban would have wide-ranging effects across the technology sector, “significantly increas[ing] US/China tensions with the brewing Cold Tech War playing out across the software and chip ecosystem.”
Crucial Quote
“Who wins? Everyone,” Bernstein declared about which of the three companies stands to benefit the most from a TikTok ban. Meta is best-positioned to gain market share in short-form video thanks to Reels’ strong adoption already, Snapchat is in line for the “biggest relative increase in time spent,” while YouTube surged in popularity following the country’s own 2020 ban on TikTok, the analysts noted.
Key Background
The Biden Administration has demanded ByteDance must sell TikTok or the app will face a possible nationwide ban, according to reports last week. TikTok has drawn scrutiny due to fears the Chinese government could access data collected by the increasingly popular app.
Forbes investigations in recent months revealed ByteDance used TikTok to spy on American citizens, including Forbes reporters, actions now under probe by the FBI and Justice Department. India banned TikTok in June 2020 to “ensure safety and sovereignty of Indian cyberspace,” citing data privacy concerns for private citizens.
The U.S. barred TikTok from being downloaded on government-issued devices last month. Fighting against legislation in Congress that would give the Biden Administration the power to ban certain foreign-owned technology, TikTok insists U.S. data has never been shared with the Chinese government, and has promised to store U.S. users’ data in American servers.
Instagram Reels and YouTube Shorts both shot up in popularity in India immediately following its ban, while new apps looking to duplicate TikTok’s format also gained millions of users. But ByteDance retains access to a glut of the personal data of past Indian TikTok users, a TikTok employee told Forbes.
This story was first published on forbes.com
