Social media is a cutthroat business. Remember when Facebook (NASDAQ:META) and Twitter were on top? Now Facebook is the domain of old people, and Twitter is Elon Musk’s fractured fairyland. As a result, Snap (NASDAQ:SNAP) finds itself gaining ground thanks to a growing movement to ban TikTok. Investors got excited and sent SNAP shares soaring in today’s trading session.
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Snap derived its benefits from a reverse halo effect of sorts. The U.S. government, among others, is moving to ban Tiktok, considering it a risk to national security. Further, there are signs that the government wants to ban moves from Chinese companies designed to prevent “…U.S. capital and expertise from being exploited in ways that threaten U.S. national security while not placing an undue burden on U.S. investors and businesses.”
However, moves to banish TikTok may not be as easy as some hope. TikTok is far, far ahead of Snap in throwing underage accounts out of the platform. Snap, however, disputes the statistics involved in the study that revealed this point. Regardless, most of social media currently labors under one giant cloud in particular: a decline overall in digital advertising spend. That decline hurts everyone, though to different extents. Advertisers have less cash to work with as they look to consolidate ahead of a potentially rough economy ahead.
Analysts are a bit ambivalent toward Snap as a whole, as it’s rated a Hold, according to analyst consensus. Further, with an average price target of $10.63, Snap stock has 10.93% downside risk.
