A member of the Federal Communications Commission (FCC), Brendan Carr, has asked technology giants Apple Inc. (NASDAQ: AAPL) and Google (NASDAQ: GOOGL) to take down TikTok, a Chinese social media app, from their app platforms.
While shares of Apple rose 1.3% on Wednesday, GOOGL stock declined marginally. Apple and Google closed the trading session at $139.23 and $2,234.03, respectively.
Carr said, “It is clear that TikTok poses an unacceptable national security risk due to its extensive data harvesting being combined with Beijing’s apparently unchecked access to that sensitive data.”
Apple and Google did not yet respond to the comments.
Responding to the allegations, TikTok, which is owned by Beijing-based ByteDance Ltd., said, “TikTok has consistently maintained that our engineers in locations outside of the U.S., including China, can be granted access to U.S. user data on an as-needed basis under those strict controls.”
The company added that its U.S. user data is now routed through Oracle (ORCL) and it is working on “additional safeguards on U.S. data for improved peace of mind for our community.”
Stock Rating
On June 29, J.P. Morgan analyst Doug Anmuth reiterated a Buy rating on Google. The analyst, however, lowered the price target from $3,200 to $2,800, which implies upside potential of 25.3% from the current level.
Consensus among analysts is a Strong Buy based on 30 unanimous Buys. Google’s average price target of $3,120.23 implies upside potential of 39.7% from current levels. Shares have declined 8.5% over the past year.
Meanwhile, Apple, too, has a Strong Buy consensus rating as per TipRanks. This is based on 21 Buys and six Holds. AAPL’s average price forecast of $185.13 implies upside potential of 33% from current levels. Shares have gained 2.2% over the past year.
Conclusion
The technological giants have been witnessing a perfect storm. Macro-economic headwinds and regulatory actions have battered these stocks so far this year. Fortunately, the FCC member’s recent remarks to remove a popular app like TikTok from Apple’s and Google’s application stores are not expected to make any structural difference to their future prospects.
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