Meta best-positioned to benefit from potential TikTok ban - Morgan Stanley

Morgan Stanley analyst Brian Nowak believes Meta Platforms (NASDAQ: META) is the best-positioned internet stock to benefit from the potential U.S. ban on TikTok.

The analyst notes increasing momentum to ban TikTok, which could have a massive impact on other social media apps as there would be 53 billion U.S. consumer hours “up for grabs.”

“A US TikTok block would impact 95mn Americans using the product an average of ~90 minutes per day…leaving 53bn hours of digital media consumption time up for grabs,” the analyst said in a client note.

While many analysts highlighted Snap (NYSE: SNAP) as the stock to own in case TikTok is banned, Nowak argues that this possibility is already “aggressively” priced into shares.

“If SNAP proves it can durably re-accelerate top line, driven by engagement and ad tool improvements, there's room for the multiple to re-rate,” Nowak added.

On the other hand, Meta Platforms has the most upside if this scenario plays out while the impact on Google (NASDAQ: GOOGL) “would likely be more muted.”

Morgan Stanley calculates that every 10% of TikTok time captured adds an estimated 1-2% (~$0.20) to Meta’s 2024 EPS and 2% to the price target.

“We would expect many TikTok users to migrate toward other leading short form video offerings, with META's Reels, YouTube Shorts, and SNAP's Spotlight best positioned. Each platform's potential earnings upside would be driven by time captured combined with their varying monetization rates,” the analyst further noted.

By Senad Karaahmetovic

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