TikTok dismisses call for Chinese owners to sell their stakes, but Snap's stock rockets amid prospect of U.S. ban
By Mike Murphy, Wallace Witkowski and Emily Bary
Snap and Meta shares rise as they'd be 'clear beneficiaries' of a TikTok ban, notes an analyst
TikTok late Wednesday dismissed a report that the Biden administration has told its Chinese owners to sell their stakes in the popular video-sharing app or face a ban in the U.S.
Earlier Wednesday, the Wall Street Journal reported that the Biden administration and the Committee on Foreign Investment in the U.S. have recently demanded the divesture by Beijing-based ByteDance Inc. on national-security grounds.
"If protecting national security is the objective, divestment doesn't solve the problem: a change in ownership would not impose any new restrictions on data flows or access," TikTok spokesperson Maureen Shanahan said in a statement Wednesday night. "The best way to address concerns about national security is with the transparent, U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting, and verification, which we are already implementing."
Benchmark analyst Mark Zgutowicz wrote Thursday that he saw "a low probability of any formal TikTok ban in the U.S. thru 2024." He titled his note to clients: "No 'Goodbye TikTok' Party for META and SNAP Anytime Soon."
Read: Could Congress actually ban TikTok in the U.S.? Analysts see 'procedural and practical hurdles'
Nonetheless, the prospect of a TikTok ban appeared to be helping those social-media stocks. Snap Inc. shares (SNAP) were ahead about 7% in premarket trading Thursday, while shares of Facebook-parent Meta Platforms Inc. (META) and Pinterest Inc. (PINS) were each up about 2%.
"If TikTok and ByteDance decided to fight this and potentially get banned in the US, the clear beneficiaries of this would be Snapchat and Meta/Facebook," Wedbush analyst Dan Ives wrote in a late Wednesday note to clients. "This move would also significantly increase US/China tensions with the brewing Cold Tech War playing out across the software and chip ecosystem with investors watching with a close eye."
TikTok chief executive Shou Zi Chew is due to appear at a hearing held by the House Energy and Commerce Committee on March 23.
Last week, Biden and a dozen senators from both sides of the aisle backed a bill that would allow the U.S. commerce secretary to block foreign technologies like TikTok
TikTok executives have said about 60% of ByteDance shares are owned by investors, 20% by employees and 20% by its founders, who hold outsize voting rights.
Many U.S. officials worry the Chinese government could access data from American users. TikTok has reportedly spent about $1.5 billion to safeguard data by using U.S.-based data centers and Oracle Corp. (ORCL) infrastructure.
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March 16, 2023 08:13 ET (12:13 GMT)
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