TikTok Ban Potential Impact on Rivals

Investing.com — If TikTok is banned in the U.S., it may lead to substantial gains for competitors Meta Platforms (NASDAQ:META) and Snap Inc (NYSE:SNAP), according to a Deutsche Bank note.

Following a federal appeals court's ruling that supports legislation requiring TikTok’s sale or ban by January 2025, investors are adjusting their views on the social media competition.

Deutsche Bank predicts that if 10% of TikTok's U.S. engagement—currently about 80 minutes per user daily—shifts to competitors, Snap’s stock could rise by $5 per share, equating to a 44% increase. Meta’s Instagram and Facebook could see a gain of $10 per share, about a 2% increase, while the effect on Alphabet’s (NASDAQ:GOOGL) YouTube would be minimal due to lower margins and its search focus.

TikTok has significantly diminished engagement on Snapchat, Instagram, and Facebook since its rapid growth beginning in 2020. A ban could reverse this trend and reallocate substantial user engagement back to Meta and Snap. For Snap, additional revenue from this shift could reach $1.1 billion annually, enhancing profitability through its under-monetized messaging features. Likewise, Meta might experience a $1.9 billion revenue boost for every 10% of engagement loss from TikTok.

While TikTok's future in the U.S. remains uncertain, facing potential legal challenges or political actions, this situation presents a promising opportunity for its rivals to regain lost market share and attract more advertising revenue.