TikTok is facing potential shutdown in the U.S. by the January 19 deadline unless the Supreme Court rules otherwise, with reports suggesting that most mainstream U.S. social media companies are positioned to benefit from this development. As the ByteDance-owned app’s popularity faces a possible disruption, social media giant Meta Platforms, Inc. (META) stands to gain significantly from the situation.

Tech analyst and venture capitalist Gene Munster, Managing Partner at Deepwater Management, has weighed in on the possible implications of a TikTok ban. Munster predicts that Meta could see a 5% increase in its revenue starting by mid-2025, driven largely by the migration of TikTok users to Meta-owned Instagram’s Reels.

TikTok’s Potential Shutdown and Meta’s Gain

Following a hearing last Friday, it appears that the U.S. Supreme Court may lean towards a decision in favor of a federal ban on TikTok, which could result in a significant shift in user behavior. Munster believes that Instagram, with its Reels feature, will likely capture a substantial portion of TikTok’s audience in the event of a shutdown, given that both platforms cater to the short-video content format that is highly popular among users.

According to Munster, TikTok’s current U.S. user base is around 170 million, with users spending an average of 70 minutes per day on the app. In contrast, Instagram’s user base stands at 180 million in the U.S., with users spending an average of 40 minutes a day on the platform. While TikTok users spend more time on the app, Munster notes that Meta could gain a large portion of TikTok’s U.S. revenue as users look for alternatives to fulfill their video content needs.

The Impact of a TikTok Ban on Meta’s Financials

With the potential for users flocking to Instagram’s Reels to fill the void left by TikTok, Munster estimates that Meta could capture at least half of TikTok’s U.S. revenue. This would provide Meta with a significant boost to its revenue, increasing its topline by roughly 5%. Munster also noted that Instagram Reels is arguably the best alternative to TikTok for users, which could encourage faster adoption and higher engagement on the platform.

Retail investors, as indicated by a Stocktwits poll, share a similar sentiment. The poll revealed that 50% of respondents believe Instagram is poised to be the biggest beneficiary if TikTok is banned in the U.S., highlighting the optimism surrounding Meta’s growth prospects in the near future.

CWEB’s Analysis: Should You Buy or Sell Meta?

CWEB analysts see the potential for Meta to experience increased engagement and revenue growth, particularly if the TikTok ban takes effect. The social media giant, already known for its robust advertising model and diverse user base across platforms like Facebook, Instagram, and WhatsApp, could further capitalize on the TikTok exodus by offering advertisers more access to highly engaged users through Instagram Reels.

However, while the prospect of increased revenue is promising, analysts also note that Meta’s performance will still be affected by broader market conditions, competition from other social media platforms, and regulatory scrutiny. Retail investors are advised to stay informed about any legal developments concerning TikTok and monitor Meta’s strategic moves to retain and grow its user base.

In conclusion, with TikTok’s potential ban driving optimism for Meta, especially in light of its Reels feature, there may be strong growth opportunities ahead for the company. For those considering an investment, CWEB analysts suggest that it may be a good time to buy Meta stock, especially if the TikTok ban materializes and boosts the company’s bottom line. However, as always, it’s important to weigh the risks and long-term potential before making any investment decisions.

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