Snap and Meta Stocks Drop Amid TikTok Ban Uncertainty

Snap and Meta Stocks Drop Amid TikTok Ban Uncertainty

Snap Inc. (Snapchat) and Meta Platforms (Instagram) saw their stocks decline on Tuesday following renewed uncertainty about the potential U.S. ban on TikTok. Reports suggest that a last-minute sale or political intervention could delay or prevent the ban, casting doubt on whether competing platforms like Snapchat and Instagram will see an immediate boost in users.

TikTok, with 170 million U.S. users, faces a January 19 ban unless its U.S. operations are sold. Recent speculation, including reports naming Elon Musk as a potential buyer, has reignited hopes of avoiding the ban. However, TikTok's legal counsel has argued that a sale within the given timeline would be “exceedingly difficult.” TikTok called the sale speculation "pure fiction."

Stock performance reflected the market's uncertainty. Snap shares fell 5.6% to $11.47, marking their largest percentage drop since August 5. Meta’s stock declined 2.2% to $595. Wall Street analysts previously speculated that TikTok’s removal could benefit rival platforms, such as Snapchat’s Spotlight and Meta’s Reels, but the new developments have tempered that optimism.

Adding to the drama, Massachusetts Sen. Ed Markey proposed legislation to extend the deadline for TikTok’s sale by 270 days, providing more time for negotiations. Meanwhile, Chinese-owned app RedNote, similar to TikTok, surged to the top of Apple’s app store rankings, showing that users may be turning to alternatives outside of Snap and Meta’s ecosystems.

Investors are closely monitoring the situation as the TikTok ban deadline approaches and the competition for short-form video content evolves.