Snapchat’s parent company, Snap Inc., saw a nearly 15% surge in its shares last week. This followed news that US senators are planning to introduce legislation that could make it easier to ban rival app TikTok, potentially benefitting Snapchat and other large US tech platforms.
Virginia Democratic Senator Mark Warner is expected to unveil bipartisan legislation on Tuesday that expands President Joe Biden’s authority to ban TikTok and other suspected information technology risks from the United States. The bill is expected to have nearly a dozen co-sponsors from both sides of the aisle.
The possibility of a TikTok ban has long been discussed in Washington due to security concerns related to its Chinese parent company. However, the recent stock surge suggests that Wall Street is taking the potential ban more seriously.
Senior equity analyst at CFRA Research, Angelo Zino, noted that Snapchat, Facebook-parent Meta and YouTube would be the “biggest beneficiaries of a TikTok ban”. Zino explained that TikTok’s emphasis on short-form videos has disrupted the entire industry, creating a headwind for Meta and Snapchat, as TikTok has been taking an increasing portion of the digital ad dollars pie from other social media players.
