TikTok ban presents major opportunity for Snap: CFRA analyst
House makers met Wednesday morning to vote on a bill that could enforce a US ban on TikTok if its parent company ByteDance doesn't divest from the popular platform. By the time of this video's publishing, House lawmakers voted 352 to 65 to pass the bill.
CFRA Research Senior Equity Analyst Angelo Zino and 22V Research Senior Managing Director Kim Wallace join Yahoo Finance Live to discuss which companies may ultimately benefit if Congress and President Biden follow through with an outright ban on TikTok.
"If you were going to kind of play this event, the best way to play it, actually, is with Snap," Zino says about Snapchat's parent company Snap Inc. (SNAP). "And a big reason for that is, one, when you kind of look at where engagement levels are, who kind of TikTok caters to, it's very similar to the kind of individuals that Snap kind of caters to out there..."
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
SEANA SMITH: What's your read just on what this means for the other competitors within the space. If you take a look at Meta, you take a look at a name like Snap, who is positioned then to benefit the most, at least in the near term?
ANJELO ZINO: Yeah. I mean, what we've told investors out there is if you were going to play this event, the best way to play it actually is with Snap. And a big reason for that is, one, when you look at where engagement levels are, who kind of TikTok caters to, it's very similar to the kind of individuals that Snap kind of caters to out there. So you would think in terms of digital ad spend dollars, you can kind of see some sort of shift from TikTok to Snap if we were to see some sort of outright ban out there.
What we would also say is also when you look at the revenue levels of Snap relative to some of its bigger peers out there, and you look at the revenue levels of TikTok, they would only need to get a sliver of that kind of ad revenue dollars out there to have a notable driver to the revenue trajectory of Snap here over the next couple of years.
Whereas a company like Meta, where they would likely see improving engagement levels from a TikTok ban, unlikely going to see a huge kind of swing in terms of the revenue trajectory, at least initially in terms of a potential ban there.
MADISON MILLS: Yeah. Angela Roth, MKM, this morning adding streaming platforms like Netflix and Disney Plus as potential beneficiaries to this as well, getting more of that screen time. But Kim, I want to flip it back to you because regardless of whether or not this bill passes, if the Chinese government does oppose the sale, that cuts off a clear liquidity path forward for investors.
So given that and given the fact that China today is saying that this proposed ban would come back to bite the US, what does that tell us about the impact of US-China relations on policy like this and other policy moving forward?
KIM WALLACE: Not really much in real terms. What we do know and what this underscores is that the competition between the US and China is increasing, it is serious, it's multi-platform. And in the Biden administration, it's been strategic. They like to use whole of government phrase.
This is a pivot, a significant pivot from the period 1999 through 2010, if you will, when most of US policy makers were still enamored with the notion of inducing China into the global economy on non-market economy terms that were granted in WTO session. Since that time, clearly, there's been a backlash to some of the practices China deploys through its technology in particular, certainly around surveillance, not just through TikTok app but other technologies globally.
