On Friday, Citi analysts reaffirmed their Buy rating on Meta Platforms Inc. (NASDAQ:META) with a steadfast price target of $753.00. The endorsement comes amid escalating uncertainties for rival TikTok, following a U.S. Supreme Court decision to uphold the PAFACA Act. This ruling mandates that ByteDance divest TikTok by January 19 or the popular app will face a national ban in the United States.
Meta's strong market position is reflected in its impressive financials, with InvestingPro data showing an 81.5% gross profit margin and robust revenue growth of 23% over the last twelve months. The company maintains a "GREAT" financial health score, with 14 additional ProTips available to subscribers.
The analyst at Citi, Ronald Josey, noted that while the current administration has indicated it will not enforce the ban and President-elect Trump seems inclined to retain TikTok post his inauguration on January 20, the likelihood of the app being removed from app stores remains high. Josey pointed out that this uncertainty around TikTok could yield user engagement and monetization opportunities for other major social platforms. With a market capitalization of $1.55 trillion and trading near its 52-week high, Meta appears well-positioned to capitalize on potential market shifts.
Specifically, the analyst suggested that Meta's Reels and YouTube Shorts could be the primary beneficiaries of the approximately 96 minutes per day TikTok users spend on the app. Moreover, Josey highlighted that advertisers are beginning to shift their focus away from TikTok, opting instead to invest in platforms such as Meta, Google (NASDAQ:GOOGL), Snapchat (NYSE:SNAP), Pinterest (NYSE:NYSE:PINS), and Reddit.
Meta Platforms Inc. is particularly well-positioned to capitalize on these shifts due to its product cycle and the improved return on ad spend (ROAS) that advertisers experience on its platform. The potential ban on TikTok is seen as an additional factor that could provide tailwinds for Meta. The Citi analyst's commentary underscores the potential for increased user engagement and revenue for Meta as the social media landscape continues to evolve.
In other recent news, the U.S. Supreme Court has ruled that TikTok, owned by ByteDance, must be sold due to national security concerns or face a ban in the United States. This decision overturns a previous ruling by a lower court. The law, which was passed by a bipartisan majority in Congress and signed by President Joe Biden, does not violate the First Amendment protection against government abridgment of free speech, as per the justices.
Furthermore, President-elect Donald Trump is reportedly considering unconventional methods to prevent the ban, including issuing an executive order to suspend the enforcement of the law for 60 to 90 days. Despite these developments, TikTok plans to shut U.S. operations of the app barring a last-minute reprieve.
In addition, shares of Snap Inc (NYSE:SNAP). and Meta Platforms Inc. fell following the news of a potential TikTok reprieve. The potential delay in enforcing the TikTok ban poses a threat to Snap and Meta, as TikTok remains a significant competitor in the social media sector.
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