The investment funds that are going defensive, and some that aren’t – The Globe and Mail IG News

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Chicago, IL – January 30, 2023 – Today, Zacks Investment Ideas highlights Meta Platforms META, Alphabet GOOGL, Snap Inc SNAP, Oracle ORCL and Global Social Media ETF SOCL.

TikTok ban is coming: 3 stocks that will benefit

The evolving landscape of social media

The social media landscape has changed dramatically over the past few years with the rapid rise of personal video platform app TikTok. Despite the rapid growth of TikTok, meta platform And Alphabet Still a major player. In terms of monthly active users, three meta platforms make up the top four rankings globally: Facebook (#1), WhatsApp (#3), and Instagram (#4).

Alphabet is in second place with its video platform Youtube and TikTok is at #6. Despite the continued dominance of existing players like META and GOOGL, the stock has underperformed in recent years. Global Social Media ETF Most Followed Social Media ETF (note that this does not include TikTok).

What is the reason for the poor performance of the current players?

For one, Meta CEO Mark Zuckerberg is paying less attention to his lucrative social media business and is instead investing valuable resources in what he sees as the future — the Metaverse. About 20% of Meta’s current investments are targeted towards this project. While the bold bet has yet to come to fruition for Zuckerberg and Meta, he plans to stay the course.

Other key factors for underperformance in domestic social media platforms such as Instagram, YouTube and Snap Inc Snap chat platform is a success of Tiktok.

Chinese-based ByteDance launched TikTok in the United States in 2016 and has dominated the platform ever since. The app, which allows users to create and modify short-form videos, has caught on especially with the younger generation. TikTok’s competitors have taken notice. To win back eyeballs, Instagram has launched “Reels” and YouTube has created “Shorts” — for users who prefer short, customizable videos like Tik Tok.

SnapChat, which is already in the short video space, has been hit the most by the rise of TikTok.

national security concerns

Although TikTok is one of the major global social media players and shows little signs of slowing growth – other factors may play a significant role in driving the social media space forward. There are growing concerns that ByteDance is collecting unnecessary personal data on its users and possibly supplying it to the Chinese government (America’s biggest rival).

Former President Donald Trump tried to ban TikTok in 2020, but ultimately managed to keep the app active. The Biden administration rebuffed Trump’s potential ban on TikTok, but ordered a national security investigation.

A potential catalyst for homegrown social media platforms

Even after the failed TikTok bans of the past, momentum is building for a new possible ban. Over the past year, FBI Director Christopher Wray, FCC Commissioner Brendan Carr and Senator Josh Hawley have called for domestic TikTok bans. Meanwhile, many US colleges have implemented their own restrictions (via WiFi) amid security concerns.

On Tuesday, Josh Hawley announced he would introduce a bill to ban the app. Investors following the social media space should keep a close eye on how the efforts to ban the app pan out. If the app is eventually banned, SNAP would stand to gain the most, along with META and GOOGL. software giant Oracle, The one who supports Tiktok through its cloud platform will be at a loss.

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