Jim Cramer believes Meta Platforms will be the biggest beneficiary if the US bans TikTok. He argues that Meta's large user base and dominance in social media will allow it to capitalize on the potential exodus of TikTok users.
While the future of TikTok remains uncertain, Jim Cramer firmly believes investors should buy Meta Platforms. He argues that Meta , the parent company of Facebook and Instagram , would be the biggest beneficiary if the U.S. bans TikTok, which is scheduled to begin on Sunday unless ByteDance, TikTok's Chinese parent company, sells the social media app.
The Supreme Court upheld President Joe Biden's law, the Protecting Americans from Foreign Adversary Controlled Applications Act, signed in April, siding with the President. Prior to the Supreme Court ruling, there were reports that Biden intended to allow Trump to handle the enforcement of the law. A spokesperson for the outgoing president confirmed this.Trump, who takes office on Monday, has expressed his desire to keep TikTok operational in the U.S. due to its massive 170 million users, including numerous small businesses and content creators. Despite ByteDance's refusal to sell the app thus far, Cramer predicts Trump will negotiate a deal that allows TikTok to remain in the U.S. while safeguarding user data from the Chinese government. TikTok has consistently maintained that it does not share user data with China.Regardless of the weekend's developments, Cramer remains confident that Meta is a strong buy. He criticizes the stock's lack of movement in response to the TikTok news, although portfolio director Jeff Marks suggests the ban's potential impact might already be factored into Meta's price. Meta's shares experienced a modest decline earlier Friday but subsequently rebounded. Cramer expresses confidence that Meta CEO Mark Zuckerberg will successfully navigate this situation, even if TikTok continues operating in the U.S. Analysts share this optimism, highlighting Meta's position as a leader in the AI race. They point to improvements in ad performance, anticipated increases in AI investments, and a new functionality allowing advertisers to integrate customer relationship management systems into Meta's ad platform as contributing factors to a potential 25% surge in Meta's stock value over the next 12 months.If the ban takes effect, Morgan Stanley designates Meta as the 'largest fundamental winner,' citing its dominant user base of 5 billion monthly active users as of January 2025. Even if Meta captures only half of TikTok's U.S. user time, it could generate an additional 5% to 9% in 2026 earnings per share (EPS), equivalent to $19 billion in incremental ad revenue, according to Wells Fargo. Further supporting this argument is TD Cowen's fourth-quarter U.S. consumer survey, which revealed that 29% of users would switch their viewing time to Meta's short-form video product Reels in the event of a TikTok shutdown, a slight increase from last year's 27%. Marks acknowledges that while a TikTok ban would significantly benefit Instagram, the platform's ultimate fate remains uncertain.It's worth noting that Trump is reportedly considering issuing an executive order to delay the national ban, as initially reported by the Washington Post. This potential order would suspend the law's enforcement for 60 to 90 days, extending the timeframe for a potential sale of the app. Several potential buyers have emerged, including billionaire investor Frank McCourt, who partnered with Shark Tank's Kevin O'Leary to propose a bid for the app. Their goal is to prioritize 'people and data empowerment' at the core of the platform's design and purpose, according to Project Liberty's website.American TikTok users are already exploring alternative platforms. As of Thursday morning, Xiaohongshu, known as 'Rednote,' is the leading free app by downloads on both Apple and Android, according to data. ByteDance-owned lifestyle app Lemon8 ranks as the second most popular app mention of the week. However, according to TD Cowen, the second-largest beneficiary after Meta is Alphabet's YouTube Shorts. The firm's survey indicates that 23% of respondents would migrate to YouTube Shorts, slightly exceeding the previous year's 22%. Morgan Stanley estimates that the shift in engagement towards Shorts could contribute between $400 million and $750 million in ad revenue by 2026. This surge in engagement is expected to further strengthen Shorts' already impressive viewership, which boasts over 70 billion daily views and more than two billion monthly signed-in users
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