Snap Can’t Count on a TikTok Ban to Help It Recover

tech.hindustantimes.com:

Snap Inc. shares need more than the talked up possibility of a TikTok ban to recover from a near 70% slump in the past year.

TikTok Chief Executive Officer Shou Chew testifies before Congress this week, seeking to head off a US prohibition of the Chinese-owned platform that would provide a timely boost for the Snapchat owner.

While a ban would present the opportunity to grab advertising share, larger social-media peers may be better placed to take advantage in a slowing market where competition for ad dollars is fiercer than ever. And in any case, such an outcome looks a long shot: Eric McNew, portfolio manager at Summit Global Investments, puts the chances of a ban at only 10-15%.

“Snap operates in such a saturated market, and it has such growth headwinds, that to bet on something with long odds like a TikTok ban is incredibly speculative,” said McNew.

“There might be some short-term momentum after a ban,” he said. Still, “once the dust settles, you'll see people are back to Meta and YouTube, and once this potential catalyst is gone, what's left?”

Snap fell 0.4% on Wednesday.

To understand the significance to social media firms of TikTok's position in the US, consider estimates from KeyBanc Capital Markets that a ban would redirect 90 minutes of users' daily engagement time, and potential ad dollars, toward rival platforms.

For Snap, with 375 million daily active users as of the end of last year, the potential growth opportunity would be greater than for much larger rivals like Meta Platforms Inc., which has nearly 3 billion users in its family of apps.

Snap, and particularly its investors, could use such a boost. The stock's 68% drop over the past year compares with a 7.7% gain in Pinterest Inc. and a 3.6% decline in Meta, the