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
-
Stock Market Today: Have We Seen the Bottom for Stocks?Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Is the GOP Secretly Planning to Raise Taxes on the Rich?Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
-
Stock Market Today: Have We Seen the Bottom for Stocks?
Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Social Security Is Taxable, But There Are WorkaroundsIf you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
-
Serious Medical Diagnosis? Four Financial Steps to TakeA serious medical diagnosis calls for updates of your financial, health care and estate plans as well as open conversations with those who'll fulfill your wishes.
-
What Wall Street's CEOs Are Saying About Trump's TariffsWe're in the thick of earnings season and corporate America has plenty to say about the Trump administration's trade policy.
-
To Stay on Track for Retirement, Consider Doing ThisWriting down your retirement and income plan in an investment policy statement can help you resist letting a bear market upend your retirement.
-
How to Make Changing Interest Rates Work for Your RetirementHigher (or lower) rates can be painful in some ways and helpful in others. The key is being prepared to take advantage of the situation.
-
When to Sell Your StockKnowing when to sell a stock is a major decision investors must make. While there's no one correct answer, we look at some best practices here.
-
Within Five Years of Retirement? Five Things to Do NowIf you're retiring in the next five years, your to-do list should contain some financial planning and, according to current retirees, a few life goals, too.
