Can TikTok bans breathe some life into social media stocks? Can TikTok bans breathe some life into social media stocks? Can TikTok bans breathe some life into social media stocks?

Can TikTok bans breathe some life into social media stocks?

Peter Garnry

Head of Equity Strategy

Summary:  TikTok bans are gathering momentum in the US following the EU parliament's decision to ban TikTok use across three EU institutions and recommending EU staff to delete the app on their personal devices due to cybersecurity issues. US social media stocks responded positively to this news with Snap shares gaining 9.5% as this social media platform has the youngest user base and thus would likely see the most increased engagement if TikTok sees demand dropping from these bans and recommendations.

TikTok bans gather momentum

Yesterday’s session saw significant interest in US social media stocks as the US is set to follow the EU in banning some foreign technology companies including the popular TikTok app which is delivered by the Chinese-based ByteDance. The concerns driving this legislation are whether US user data could be accessed by the Chinese intelligence agencies. Last Tuesday, the EU parliament banned TikTok from its staff devices due to cybersecurity issues and is now banned across three major EU institutions and the EU parliament also put out a “strongly recommended” notice to all staff of deleting the TikTok app from their personal devices. The nervousness over data breaches is not a one-way street as Chinese authorities urged a couple of weeks ago state-owned enterprises to phase out using the big four accounting firms, which all from Western countries, driven by concerns of data security. These bilateral moves underscore the decoupling between China and Western countries across several key technologies.

Snap gained the most on upcoming US legislation bill

The upcoming bill legislating foreign technology caused US social media stocks to rally yesterday with Snap (+9.5%) gaining the most with the three other social media stocks were mixed; Meta (-0.2%), Alphabet (+1.6%), and (+1.1%). The reason for why Snap reacted the most positively is that TikTok is heavily used by young people which is also the target of Snap and if parents get more aware of the potential cybersecurity issues then usage of TikTok might switch to Snap. Google’s YouTube is another social media platform that could see a positive effect from TikTok bans. While social media stocks got a boost yesterday the 5-year performance across these companies has been below the overall equity market except for Alphabet highlighting an industry that has lost its growth dynamics and interest of investors.

Social media equity valuations are historically low

The hangover from the pandemic boom has drastically impact equity returns and equity valuations since the peak with the most dramatic change observed in Snap shares with the 2-year forward EV/sales ratio falling from just above 18x at the peak to around 3x today. Investors are paying significantly less for revenue and revenue growth among social media stocks. One thing is that TikTok dramatically changed the social media landscape in the US and Europe, but Apple’s data privacy changes also impacted online advertising prices because tracking got more difficult. With energy crisis, surging commodity prices, reshoring, the US CHIPS Act, and the war in Ukraine it seems investors are most interested in companies and themes that are thriving on the comeback of the physical world.


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.