The stock of Meta Platforms (META) is marching higher on news that a U.S. federal appeals court upheld a law requiring that China’s ByteDance sell social media app TikTok or face a ban in America.
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META stock closed 2% higher on December 6 on news of the U.S. appeals court’s decision. The popular TikTok app competes against Meta Platforms social media apps such as Facebook and Instagram. Other U.S. social media stocks were also rising on the news, including Snap (SNAP) and Pinterest (PINS).
TikTok is one of Meta’s main rivals and has soared in popularity throughout the U.S., particularly with younger audiences. Today, TikTok has 170 million users in America. However, there are concerns that the short videos on TikTok are harming the mental health of teenagers, and that the app is used by the Chinese government to spy on users.
Presidential Action
In April of this year, U.S. President Joe Biden signed a law that would require privately held ByteDance to divest the TikTok app, or companies such as Apple (AAPL) and Alphabet (GOOGL) will have to stop supporting it through their app stores.
The unanimous ruling on Friday by a three-judge panel of the U.S. Court of Appeals in Washington, D.C. rejected TikTok’s argument that the law is unconstitutional and violates the First Amendment rights of its users. TikTok said after the latest ruling that it will take its case to the U.S. Supreme Court.
Meta Platforms and other U.S. social media companies are widely viewed to be beneficiaries of any ban in the U.S. of the TikTok app. META stock has gained 77% this year.
Is META Stock a Buy?
The stock of Meta Platforms has a consensus Strong Buy rating among 44 Wall Street analysts. That rating is based on 40 Buy, three Hold, and one Sell recommendations issued in the last three months. The average META price target of $662.62 implies 6.23% upside from current levels.
