Why Snap Stock Popped on Wednesday

Key Points

• A peer social media company might not be changing hands soon as some expected.

• President Trump issued a new executive order on the U.S. operations of TikTok, delaying enforcement of an effective ban once again.

• 10 stocks we like better than Snap ›

Social media company Snap (NYSE: SNAP) proved to be a popular stock on Wednesday, as news about a peer made its equity look attractive. Snap closed the day more than 3% higher in price, comparing very favorably to the slight decline of the benchmark S&P 500 index.

Yet another TikTok delay

Towards the end of Tuesday's trading session, President Trump issued the latest in a series of executive orders concerning TikTok, the controversial short-form video app from Chinese developer ByteDance.

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Image source: Getty Images.

The new order extended the delay -- for the fourth time -- in enforcing a law that effectively bans TikTok in this country; the extension expires on Dec. 16. That move followed Treasury Secretary Scott Bessent's announcement that U.S. and Chinese officials had agreed to a "framework" of a deal that might put TikTok's U.S. operations in the hands of domestic companies.

The same day, Reuters reported that these would be handed over to a consortium that included tech sector mainstay Oracle, private equity firm Silver Lake Technology Management, and venture capital firm Andreessen Horowitz.

Citing unnamed "people familiar with the matter," the news agency added that the entity's ownership would be approximately 80% U.S. investors, with the remainder being Chinese.

Snap judgement

The delay benefits Snap because it implies that the Chinese/American deal -- the specifics of which have yet to be provided -- will take some time to implement. In the hands of well-capitalized American investors, TikTok on our shores could be developed into a giant social media company that might eat share from sector players like Snap.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.