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
-
13 Answers to Pressing Social Security QuestionsFrom smart claiming strategies for couples to tips on maximizing your monthly check, we have advice that can help you.
-
Keep Tax Collectors at Bay with Muni Bond FundsMunicipal bonds can be good insurance against inflation — and interest is tax-free. But as with all investments, understanding risk is key.
-
Keep Tax Collectors at Bay with Muni Bond Funds
Municipal bonds can be good insurance against inflation — and interest is tax-free. But as with all investments, understanding risk is key.
-
Eight Tips From a Financial Caddie: How to Keep Your Retirement on the FairwayThink of your financial adviser as a golf caddie — giving you the advice you need to nail the retirement course, avoiding financial bunkers and bogeys.
-
Just Sold Your Business? Avoid These Five Hasty MovesIf you've exited your business, financial advice is likely to be flooding in from all quarters. But wait until the dust settles before making any big moves.
-
Cord Cutting Could Help You Save Over $10,000 in 10 YearsHow cutting the cord can save you money and how those savings can grow over time.
-
Should I Buy Stocks or Should I Buy Bonds Right Now?Generally speaking, stocks provide reasonable growth while bonds provide stable income. Each play important roles in diversified portfolios.
-
You Were Planning to Retire This Year: Should You Go Ahead?If the economic climate is making you doubt whether you should retire this year, these three questions will help you make up your mind.
-
Are You Owed Money Thanks to the SSFA? You Might Need to Do Something to Get ItThe Social Security Fairness Act removed restrictions on benefits for people with government pensions. If you're one of them, don't leave money on the table. Here's how you can be proactive in claiming what you're due.
-
From Wills to Wishes: An Expert Guide to Your Estate Planning PlaybookConsider supplementing your traditional legal documents with this essential road map to guide your loved ones through the emotional and logistical details that will follow your loss.
