Why did Snap shares surge almost 10% Monday? The possibility of TikTok being gone
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Snap (NYSE:SNAP) shares climbed nearly 10% Monday as the social-media company benefitted from reports that support for ban on TikTok in the U.S. has gained steam in Congress.
On Sunday, Sen. Mark Warner [D.-Virginia], said in an interview on Fox News that he intends to introduce legislation this week that would allow the banning of certain Chinese technologies in the U.S., including TikTok, the popular and controversial social-video app, owned by ByteDance (BDNCE).
As TikTok's use has spread among younger Americans, concerns have grown about how the app is collecting and users people's information, and ByteDance's (BDNCE) connection to the Chinese government and military.
Volume in Snap (SNAP) was more than twice the stock's dailiy average, as more than 76M shares of Snap (SNAP) traded hands by the closing bell. The company typically averages 31.4M shares exchanged on a daily basis.
The sentiment among investors centered around Snap (SNAP) benefitting from possibly losing a top rival in the market for short-form videos that have turned TikTok from a fad into on of the leaders in the social-media sector.
As Snap (SNAP) shares surged, other social-media stocks put in a mixed performance on the TikTok reports. Pinterest (PINS) shares edges up by 1%, while Google parents Alphabet (GOOG) rose 1.7%, and Facebook parent Meta Platforms (META) slipped by 0.2% on the day.
Wall Street analysts and Seeking Alpha authors both currently have consensus hold ratings on Snap's (SNAP) stock. Seeking Alpha's Quant System, which historically outperforms the stock market, also gives Snap's shares a rating of hold.