Brendan Carr of the Federal Communications Commission (FCC) hinted that there may be a possibility of a ban on the use of the Chinese app TikTok in the U.S. This news pushed American social media stocks higher. Snap (NYSE:SNAP) jumped 7.5%, while Facebook, Instagram, and WhatsApp parent Meta Platforms (NASDAQ:META) popped 4.6%.
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In an interview with Axios, Carr cited the risk of national data security and political interventions in the U.S. as possible causes for the ban. Further, Carr even pressed the notion that the Council on Foreign Investment in the U.S. (CFIUS) should pursue a ban on the Chinese social media app.
Carr was heard saying that there isn’t, “a world in which you could come up with sufficient protection on the data that you could have sufficient confidence that it’s not finding its way back into the hands of the [Chinese Communist Party].”
Carr’s statements do not mention any pending litigation against TikTok or its Chinese owner, ByteDance. However, the CFIUS is probing the potential threat to national security from TikTok’s Chinese ownership. Also, the Department of Justice (DOJ) is leading negotiations over a security deal.
In its defense, TikTok has stated that it is storing U.S. consumer data outside of China, so there is no risk of data flowing back to the mainland. A TikTok spokesperson said, “Commissioner Carr has no role in the confidential discussions with the U.S. government related to TikTok and appears to be expressing views independent of his role as an FCC commissioner.”
Is Snap a Buy or Hold?
On TipRanks, Snap stock has a Hold consensus rating based on seven Buys, 19 Holds, and two Sell ratings. The average Snap price forecast of $10.62 implies 2.6% upside potential to current levels. Meanwhile, the stock has lost 78% so far this year.
Is Meta Stock Expected to Rise?
On TipRanks, the average Meta Platforms price target of $144.72 implies there is 52% potential rise from current levels. Also, META stock has a Moderate Buy consensus rating based on 23 Buys, ten Holds, and three Sell ratings. Meanwhile, year to date, the stock has lost 71.9%.
