New comments from Raymond James analysts suggest that TikTok could have a complicated path ahead of it if it wants to continue operating in the U.S. That’s due to a new law that would force ByteDance, the parent company of TikTok, to sell the short-form video app to avoid the alleged dangers of it leaking U.S. user data to China.
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This new law goes into effect on Jan. 19 and the Supreme Court will hear oral arguments against it, which ByteDance argues is unconstitutional, on Jan. 10. This doesn’t give the company much time to get things in order before the ban goes into effect. If that happens, TikTok will no longer be available on Apple’s (AAPL) or Alphabet’s (GOOGL) Google Play Store. U.S. internet service providers will also ban its operations.
According to the Raymond James analysts, this “suggests a high bar for TikTok to clear.” The firm also says that “This accelerated schedule likely increases the odds of the law being upheld, potentially leading to a ban or forced sale of TikTok’s U.S. operations.”
Can Trump Save TikTok?
In a strange turn of events, incoming President Donald Trump may be TikTok’s only hope to avoid a ban. That’s despite Trump kicking off the battle against TikTok during his prior presidency. Trump will take office on Jan. 20, just one day after the new law goes into effect.
The current Trump administration holds a much more favorable stance on TikTok thanks to the growth of his campaign on the platform. Trump remarked that it “had an impact” that helped him gain young voters in the 2024 presidential election. This has Trump saying his team is “taking a look,” at the app and its potential ban.
What This Means for Investors
Considering the pain that TikTok has been to U.S. social media companies, many are likely hoping the platform will be banned in the country. If the ban goes through, it could result in a massive influx of users to other platforms. A few options include Meta Platform’s (META) Instagram, Google’s YouTube, and Snap’s (SNAP) Snapchat. Traders expecting the TikTok ban to succeed might benefit from betting on these stocks.
