TikTok Ban Could Fuel Major Gains for Meta and Snap

If TikTok faces a ban in the United States, it could create significant growth opportunities for competitors like Meta and Snap, as highlighted in a recent report by Deutsche Bank.

A federal appeals court recently upheld legislation that may force TikTok to either sell its U.S. operations or cease them entirely by January 2025. This decision has prompted investors to reassess the competitive dynamics within the social media sector.

According to Deutsche Bank, if just 10% of TikTok's U.S. user engagement—currently averaging 80 minutes daily per user—shifts to competitors, Snap’s stock could experience a $5 per share increase, representing a substantial 44% upside. Meta, the parent company of Instagram and Facebook, could see a $10 per share rise, equating to a 2% gain. Alphabet’s YouTube, however, would likely see minimal impact due to its lower-margin ad model and emphasis on search over social engagement.

TikTok has significantly disrupted user engagement on platforms like Snapchat, Instagram, and Facebook since its meteoric rise in 2020. A potential ban or sale could reverse this trend, redirecting valuable user activity back to its rivals. For Snap, this could translate to an additional $1.1 billion in annual revenue, with higher profitability driven by under-utilized features like messaging. Meanwhile, Meta could capture an estimated $1.9 billion in new revenue for every 10% engagement shift from TikTok users.

Although TikTok's future in the U.S. remains uncertain—given potential legal and political hurdles—a ban or sale presents a lucrative opportunity for competing platforms to recapture lost users and boost ad revenue.

This scenario positions Meta and Snap as clear beneficiaries, potentially reshaping the social media landscape and creating new revenue streams for both companies.

(Sources: investing.com, reuters.com)