Social media stocks experienced a notable decline on Tuesday, with Meta (META), Snap (SNAP), and other key players seeing drops, as speculation surrounding TikTok’s future in the United States began to surface. This comes ahead of the Jan. 19 deadline, when legislation to potentially ban TikTok will take effect unless the Supreme Court rules otherwise. The pressure on these stocks is also linked to the growing uncertainty surrounding TikTok’s U.S. operations.
According to a Bloomberg report, TikTok’s parent company, ByteDance, has reportedly approached Elon Musk (TSLA), the owner of X (formerly Twitter), regarding the possibility of Musk acquiring TikTok’s U.S. business. The rumored deal could be connected to Musk’s close relationship with former President Donald Trump, with the Chinese government allegedly considering Musk taking over both TikTok and X.
Such a move could have significant implications for social media platforms, as Musk’s involvement with TikTok could help attract more advertisers to X through the app’s 170 million users. Additionally, Musk’s artificial intelligence company, xAI, could capitalize on the massive data generated by TikTok, potentially boosting both businesses.
Meta’s stock declined by 2.5% in early trading on Tuesday, while Snap saw a similar drop of 3.1%. Analysts believe the market reaction is partly due to the uncertainty surrounding TikTok’s future and how a potential change in its U.S. operations could affect the competitive landscape of social media. With Musk’s involvement potentially creating new dynamics in the market, investors are cautious, and some are reevaluating their positions in companies like Meta and Snap.
Wedbush analyst Daniel Ives shared his thoughts, stating that a potential TikTok sale to Musk is not entirely out of the question, especially if the Supreme Court upholds the ban. Ives also pointed out Musk’s ties to Beijing, which could further ease concerns about such a transaction. In this scenario, Ives estimated the value of the deal at around $40 billion to $50 billion, though it would likely exclude TikTok’s algorithm.
Alternatively, Ives suggested that ByteDance could explore a joint partnership with Musk, helping to prevent a full ban of TikTok while still benefiting from his involvement.
Despite these developments, Variety reported that China has denied any discussions regarding the potential deal, further adding to the uncertainty. As social media stocks remain volatile, investors are closely monitoring these rumors, as any major shifts in TikTok’s future could have significant implications for the industry at large.
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