Published - March 07, 2023 @ 11:49 AM (EET)
Snap Inc. shares rose sharply on Monday as lawmaker initiatives to ban TikTok appeared to be gaining momentum in the US.
Snap, the parent company of Snapchat, climbed as much as 11.% after US Senate Intelligence Committee Chairman Mark Warner disclosed plans on Fox News to introduce a bill Tuesday addressing foreign technology in the US that the Biden administration is poised to support.
In a press briefing last week, Olivia Dalton, White House Principal deputy press secretary, acknowledged worries about TikTok, owned by parent company ByteDance, including concerns about data sharing with the Chinese government.
According to people familiar with the matter, the White House would codify authorities granted to the Commerce Department through an existing executive order issued under former president Donald Trump to manage information and communications technology threats.
WHY IT MATTERS
As both apps offer short-form video and are seen as a form of entertainment as much as they are for social media, Snap is arguably TikTok's closest competitor in the US.
Recently, Snap (NYSE:SNAP) has seen its growth slow substantially, which the company said has primarily contributed to a broader economic slowdown. Still, with increased competition, Snap has underperformed its peers, with shares dropping 75% since the end of 2021, compared to Meta Platforms' (NASDAQ:META) decline of 45% and Pinterest's (NYSE:PINS) drop of 27%.
However, following news on the potential TikTok ban in the US, shares rose more significantly early in Monday's trading session, putting the stock on pace for its most significant percentage increase since October, when it gained over 15%.
Volume had hit 52.4 million shares just after midday versus a daily average of 31.5 million and tagged its highest point since Feb 8.
NOW WHAT
Separately, ByteDance has sought to distance the service from its Chinese roots, including by hosting user data in Singapore, even though threats of a ban in the US have lingered for years.
Even so, Snap stock should continue to benefit from more restrictions against TikTok, should they come. So far in 2023, Snap stock has risen over 33%.
