TikTok catches social-media cold and cuts ad-revenue outlook
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It looks like TikTok, the provider of the controversial short-form video app that has been often cited as the reason for many of the ills of Snap (SNAP) and Facebook's Meta Platforms (NASDAQ:META) isn't immune to the issues affecting those social-media giants.
TikTok, which is owned by Chinese company ByteDance (BDNCE), cut it forecasts for revenue from advertising this year to $10B from $12B. Even at $10B, that would still be more than twice the $4B in ad sales TikTok took in during 2021.
However, cutting its forecast suggests that the slowdown in ad-based revenue that is weighing on much of on the Internet sector is also weighing on TikTok's business prospects. The Wall Street Journal reported that TikTok Chief Executive Shou Zi Chew told company employees of the ad-revenue shortfall at a recent online meeting.
The rise of TikTok, especially among younger adults and teens, has been given as a reason that Facebook (META) and other social-media companies have seen drops in their daily and monthly usage, and ad sales expectations.
In late October, Meta (META) shares plunged following a disappointing quarterly report and forecast, as the company warned of multiple challenges to its sales outlook into 2023. Earlier this week, Meta (META) said issues affecting its business would cause it to lay off approximately 11,000 employees. The situation with Meta (META) is so potentially dire that Steven Cress, head of quantitative strategies at Seeking Alpha said the Facebook parent could see its shares fall by as much as another 70% next year.
TikTok has also drawn more ire from U.S. politicians due its connections to the Chinese government and military. On Thursday, Sen. Marco Rubio (R-FL), and Representative Mike Gallagher (R-WI), introduced legislation to ban TikTok in the U.S. unless it takes steps to change its ownership structure.