Snapchat and Meta lead social media stocks higher as TikTok CEO gives 'disaster' testimony to Congress
Matt McClain/The Washington Post/Getty Images.
- Snapchat and Meta Platforms jumped on Thursday as the CEO of TikTok gave testimony to Congress.
- CEO Shou Chew sought to quell concerns that TikTok is a Chinese asset that could spy on its 150 million American users.
- "We would characterize today's testimony by TikTok CEO Shou Zi Chew in the Beltway as a 'disaster' moment," Wedbush said.
Shares of social media stocks jumped on Thursday, with Meta Platforms and Snapchat leading the way after TikTok CEO Shou Chew gave what one analyst called a "disaster" testimony to Congress.
Shares Meta Platforms and Snapchat jumped as much as 4% and 10% in Thursday trades, respectively.
Chew sought to quell growing national security concerns that ByteDance-owned TikTok is a Chinese asset that is able to spy, or already has been spying, on its growing user base of 150 million Americans.
Both President Biden and former President Trump have called for the social media app to be either banned or sold to a US-based company.
According to Wedbush analyst Dan Ives, Chew failed at his objective of containing those concerns.
"We would characterize today's testimony by TikTok CEO Shou Zi Chew in the Beltway as a 'disaster' moment that will likely catalyze more calls by lawmakers and the White House to look to ban TikTok within the US if the company does not look to spin-off and force a sale from Chinese parent ByteDance," Ives said in a note on Thursday.
Ives said that the testimony included little of the typical grandstanding from members of Congress, and instead was filled with targeted questions on TikTok's business and privacy practices, with bipartisan participation from both Democrats and Republicans.
Ives ultimately expects TikTok to be sold to a US tech player in the next three to six months.
"If ByteDance fights against this forced sale, TikTok will likely be banned in the US by late 2023," Ives said.
That would be a boon for social media stocks like Meta and SnapChat, among others, as TikTok has been increasingly gobbling up digital advertising spend from US companies, threatening the earnings results of many of the biggest social media firms.
"For Meta and Zuckerberg as well as Snapchat and Google, today's hearing was like eating popcorn watching a good movie as the social media disruption from TikTok will clearly benefit Meta and Snapchat front and center in the eyes of the street," Ives said, who called Chew's testimony a "black eye for TikTok."
Shares of Meta were trading at $203.17, while Snap was trading at $11.31 as of 3:27 p.m. Thursday.