Stocks rise as Congress renews efforts to ban TikTok | CNN Business
Investors are betting that Washington’s growing scrutiny of TikTok could be good news for rival Snapchat.
Shares of Snapchat’s parent company rose nearly 10% on Monday and another 5% in early trading on Tuesday following news that US senators plan to introduce legislation that could make it easier to ban rival app TikTok.
Sen. Mark Warner, D-Virginia, is expected to introduce bipartisan legislation Tuesday afternoon that would expand President Joe Biden’s authority to ban TikTok and other suspected U.S. information technology risks, a person told CNN familiar with the matter. The bill is expected to have nearly a dozen co-sponsors from both sides of the aisle.
The stock’s rise suggests some on Wall Street are taking the possibility of a TikTok ban more seriously, after years of talk in the nation’s capital about cracking down on the short-form video app due to security issues related to its Chinese parent company.
It also highlights how lawmakers’ efforts to address the perceived threat from TikTok could ultimately benefit the big US tech platforms, including dominant companies that some in Washington also want to control for other reasons.
Angelo Zino, senior equity analyst at CFRA Research, wrote in a note on Monday that the “big beneficiaries of a TikTok ban” would be Snapchat, Facebook’s mainstay Meta and YouTube.
“TikTok’s emphasis on short-form videos has increased consumer engagement and time spent and changed the entire industry, creating a headwind for META/SNAP,” Zino wrote. “Given TikTok’s increasing user/engagement growth, it has been taking an increasing share of the digital ad dollar pie from other social media players.”
In recent years, TikTok’s popularity has led several major US apps to imitate some of its features, including the launch of Instagram Reels and YouTube Shorts.
Shares of YouTube’s parent company, Alphabet, were essentially flat on Tuesday. Meta, which is up 50% so far this year thanks to its commitment to “efficiency,” rose slightly in early trading on Tuesday, likely on a report that it plans more layoffs.
A TikTok ban, or the possibility of one, may be another positive for Meta stock this year.
– CNN’s Brian Fung contributed to this report.