What a potential TikTok ban could mean for Club holding Meta Platforms

Published Thu, Mar 16 20233:00 PM EDTUpdated Thu, Mar 16 20234:41 PM EDT

TikTok on Thursday confirmed that the Biden administration has demanded its Chinese parent ByteDance sell its stake in the short-form video platform, or face a possible ban in the United States. The U.S. has previously expressed concerns that the app presents a national security risk, as American user data is exposed to the Chinese government. Moreover, the UK announced plans Thursday to ban TikTok . India permanently banned the app in June 2020 and other governments around the world are also considering this move due to user data and privacy issues. META 1Y mountain Meta's performance over the last 12 months TikTok has seen robust growth since it launched in 2016, competing with Reels at Meta Platforms (META) and Alphabet 's (GOOGL) YouTube Shorts. The possibility of TikTok getting banned is low, said Barton Crockett, analyst at Rosenblatt Securities, but added it would be a "windfall" for Meta if it happened. Without a ban, TikTok is a "juggernaut" that could keep gaining market share. "It's highly probably that TikTok remains a meaningful competitor for Meta, Facebook [and] Instagram." Shares of META were trading 1.5% higher Thursday at roughly $200 apiece. The Club's take: Jim Cramer said Thursday the "cards are lining up against TikTok." A potential ban of the app would likely lead to a boost in engagement for Reels and Shorts. That, in turn, could attract more ad dollars to these platforms, which are already under pressure in a weakening economy. Overall, we see the social media giant heading in the right direction as it consistently seeks ways to acclimate to the new economic environment. Its recent corporate restructuring, headcount reductions and cuts to capital and operational expenses are in line with CEO Mark Zuckerberg's commitment to make 2023 the "year of efficiency," which should support revenue and earnings growth. A previous version of this story incorrectly characterized JPMorgan's analysis of Amazon's stock. (Jim Cramer's Charitable Trust is long META, GOOGL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION