Meta Platforms (META) opened higher Tuesday after lawmakers in both the House of Representatives and the Senate passed legislation that will ban rival social media app TikTok in the United States.
The TikTok ban was added to a larger bill that provides $95 billion in aid to Ukraine and Israel by the House over the weekend and passed there Saturday by a vote of 360-58. On Tuesday, the bill cleared the Senate, 79-18, and now heads to the desk of President Joe Biden, who has said he will sign it.
The bill gives TikTok parent ByteDance up to one year to sell its stake in the popular social media platform.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"The motivations [for the TikTok bank] are around concerns that China could misuse American user data," says Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown. While the broader ramifications for the tech sector are unknown, Streeter says that the passage of this bill is "a clear signal of the U.S.' willingness to crack down on big tech, when it's deemed unsafe."
Streeter adds that the impact for other social media platforms are likely limited because this is more a political move. "That said, it's still something the likes of Meta will be keenly monitoring," she notes. "Although the bill is progressing, nothing is set in stone – TikTok is likely to mount a legal challenge to the ruling."
TikTok ban hits just ahead of Meta earnings
Indeed, while Meta Platforms, the parent company of Facebook, Instagram and WhatsApp, initially jumped on the news, it quickly erased these early gains ahead of the company's first-quarter earnings report, which is due after Wednesday's market close.
The event is one of the most anticipated on this week's earnings calendar. Analysts' expect Meta to report first-quarter revenue of $36.2 billion and earnings per share of $4.32, representing growth of 26.2% and 96.4%, respectively, from the year-ago period, according to Yahoo Finance.
BofA Securities analyst Justin Post is bullish on Meta ahead of the report. His firm has a Buy rating on the Magnificent 7 stock and a $550 price target.
"We remain positive on Meta and reiterate our thesis that Reels, Messaging, and AI driven ad improvements are still early, and could lead to positive product surprises & revenue momentum in 2024," Post said in an April 19 report. He added that the firm thinks "Meta's AI assets are underappreciated in the stock price with stock at 16 times core 2025 earnings per share."
Wedbush is also bullish on the communication services stock. In an April 11 report, the research firm reiterated its Buy rating and raising its price target to $570 from $520.
"We think the company is well positioned heading into Q1 results given positive feedback from advertisers in our survey work and healthy underlying demand trends with particular strength in the social vertical," Wedbush said. "We are raising our estimates ahead of the Q1 report and now expect revenue in the quarter of $36.9 billion (+28.8% year-over-year), a roughly 3% increase from our prior estimate."
According to S&P Global Market Intelligence, the consensus analyst target price for Meta stock is $541.20, representing implied upside of 10% to current levels. Additionally, the consensus recommendation is a Buy.
Related Content
-
How to Create a Retirement Income Plan to Cover Caregiver CostsGetting all of your assets to work together is key to having enough retirement income to pay for caregivers and other long-term care needs.
-
How One Caregiver Is Navigating a Loved One's DementiaShe's spent many hours doing research and speaking with other caregivers to find her way to resources designed to help caregivers.
-
How One Caregiver Is Navigating a Loved One's Dementia
She's spent many hours doing research and speaking with other caregivers to find her way to resources designed to help caregivers.
-
Stock Market Today: Markets Waver as Inflation Continues to EaseStocks gave up early gains as waning consumer price inflation leaves rate-cut bets essentially unchanged.
-
October CPI Report Hits the Mark: What the Experts Are Saying About InflationCPI While the current pace of rising prices appears to have leveled off, the expected path of rate cuts has become less certain.
-
Nvidia Earnings: Updates and CommentaryNvidia earnings have become a key event on Wall Street which makes the AI bellwether's next report, due out after the November 20 close, must-see viewing for investors.
-
What's Behind Starbucks Stock's New Sell Rating?Starbucks stock has rallied hard since Brian Niccol was tapped as the coffee chain's new CEO, but one analyst thinks turnaround plans will be costly.
-
Cava Stock: Analysts Rush to Raise Price Targets After EarningsWedbush, for one, issued a Street-high price target for Cava stock after its beat-and-raise quarter. Here's what you need to know.
-
Why Spotify Stock Is Surging Despite Its Earnings MissSpotify stock is notably higher Wednesday after the audio streaming company gave an upbeat fourth-quarter outlook. Here's what you need to know.
-
How Trusts Can Be Used to Protect LLCs From CreditorsCombining limited liability companies with domestic asset protection trusts can achieve maximum asset protection.
