Why META and SNAP Are Losing Ground Today

The shares of social media companies Meta (META) and Snap (SNAP) are declining 2.5% and 6%, respectively today. The two names are pulling back following a report that Elon Musk could acquire TikTok’s U.S. business.

If such a scenario materializes, Musk could invest a great deal of his funds in TikTok US, and the deal could generate a great deal of publicity for the social media giant. As a result, Meta and Snap could lose market share to TikTok US.

A close up of a user’s hand scrolling through a mobile social media application.

On the other hand, if TikTok US is banned, Snap and Meta would likely be able to obtain significant portions of its advertising dollars, while some of TikTok’s current users would likely spend more time on the social media sites of Meta and Snap.

More About Musk’s Potential Bid

Chinese officials prefer that TikTok US remain under the control of China-based ByteDance. However, it appears as though the U.S. Supreme Court will uphold a U.S. law banning TikTok unless ByteDance sells it.

Consequently, Beijing is considering letting Musk’s X acquire TikTok US. Under this plan, the multi-billionaire would manage both of the social media websites in the framework of a single firm.

Also noteworthy is that the deal would allow Musk’s AI ventures to benefit from TikTok’s massive data, while TikTok could market itself to X’s advertisers and vice versa.

While we acknowledge the potential of META, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey