Last week, there was a lot of uncertainty about the future of TikTok in the United States.
The Supreme Court upheld the ban on the app, before newly inaugurated President Trump issued an executive order granting parent company ByteDance an additional 75 days to sell 50% of TikTok to American investors. under penalty of prohibition.
Why it matters: TikTok is an incredibly popular social media platform, with over 170 million users in the United States.
TikTok has a respectable 15% market share of social media ad spend in the United States,
This share is lower than the 70% controlled by Meta Platforms but higher than its peers like Snap Reddit and Pinterest .
- We believe Meta Reels and YouTube Shorts are the most obvious beneficiaries of potential user or advertiser churn for TikTok. Both of these products saw significant user engagement following TikTok’s ban in India in 2020, and we expect a similar trend if TikTok is banned in the United States.
- Short-form video is a popular media that is growing rapidly, and its proliferation is particularly strong among young people. Advertisers targeting the medium may be discouraged by the uncertainty surrounding TikTok’s future and divert their money to other short-form video products.
Consequences: We raise our fair value estimate for Meta to $590 per share, from $560, as we factor in slightly higher U.S. ad revenue for 2025, primarily due to advertisers looking to allocate some of their TikTok ad budgets elsewhere.
-- Our base case scenario sees TikTok remaining operational in the US, likely through a 50% sale to a US-based company.
- If ByteDance does not reach an agreement regarding the future of TikTok within the next 75 days, leading to a ban in the United States, we would expect a greater flow of ad dollars and users to Meta and an additional increase of the fair value of 20%.
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