analysts is outpacing TikTok for user attention thanks to its Reels service.īloomberg Intelligence sees Google-owner Alphabet Inc. Meta is increasingly focused on short-form video content, and according to Citigroup Inc. emerging as platforms with ad-supported subscription tiers for streaming video.Īgainst this backdrop, Snap forecast its first ever quarterly revenue decline earlier this year, in what represented its third straight disappointing update.Īnalysts expect an 85% drop in adjusted earnings this year, compared with 40% growth at Meta, according to estimates compiled by Bloomberg.Įven in the event of a TikTok ban, Snap may not be best-placed to benefit, despite both catering more for younger users. Their wariness recognizes both the impact on ad spending of a bleaker economic outlook and ever fiercer competition, with Netflix Inc. Fewer than 20% of analysts recommend buying the stock, having slashed estimates for earnings and revenue over the past three months. While Snap cut about a fifth of its workforce last year, caution remains high. and a 3.6% decline in Meta, the Facebook parent that has regained Wall Street's favor in recent months with aggressive cost reductions, including multiple rounds of layoffs that prompted upgrades from both Morgan Stanley and KeyBanc Capital Markets this week. The stock's 68% drop over the past year compares with a 7.7% gain in Pinterest Inc. Snap, and particularly its investors, could use such a boost.
To understand the significance to social media firms of TikTok's position in the US, consider estimates from KeyBanc Capital Markets that a ban would redirect 90 minutes of users' daily engagement time, and potential ad dollars, toward rival platforms.įor Snap, with 375 million daily active users as of the end of last year, the potential growth opportunity would be greater than for much larger rivals like Meta Platforms Inc., which has nearly 3 billion users in its family of apps. Still, “once the dust settles, you'll see people are back to Meta and YouTube, and once this potential catalyst is gone, what's left?” “There might be some short-term momentum after a ban,” he said. “Snap operates in such a saturated market, and it has such growth headwinds, that to bet on something with long odds like a TikTok ban is incredibly speculative,” said McNew.
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