In case of TikTok ban, Meta, Snap set for significant upside, says Deutsche Bank

Investing.com -- In case TikTok is banned in the United States, it could drive significant gains for rivals Meta Platforms (NASDAQ:META) and Snap Inc (NYSE:SNAP), according to a Deutsche Bank (ETR:DBKGn) note.

Following a federal appeals court's ruling upholding legislation that mandates TikTok’s sale or ban by January 2025, investors are recalibrating the competitive landscape in social media.

Deutsche Bank estimates that if 10% of TikTok’s U.S. engagement—currently averaging 80 minutes per day per user—shifts to competitors, Snap’s stock could see a $5 per share gain, or a 44% upside. Meta’s Instagram and Facebook could benefit by $10 per share, representing a 2% upside, while the impact on Alphabet’s (NASDAQ:GOOGL) YouTube would be negligible due to lower margins and its focus on search.

TikTok’s presence has notably reduced engagement across platforms like Snapchat, Instagram, and Facebook since its rapid ascent in 2020. A ban or removal could reverse this trend, reallocating significant user engagement to Meta and Snap. For Snap, incremental revenue from such a shift could reach $1.1 billion annually, with a meaningful boost to profitability due to under-monetized messaging features. Similarly, Meta could see a $1.9 billion revenue lift for every 10% engagement shift from TikTok.

While TikTok’s future in the U.S. remains uncertain—with possible legal challenges or political interventions on the horizon—the scenario presents a promising opportunity for TikTok’s rivals to reclaim lost ground and capture additional ad dollars.