Benzinga - by Chris Katje, Benzinga Staff Writer.
Social media app TikTok is closer to being banned in the U.S. after Congress and President Joe Biden signed legislation to force a sale of the app to an American company.
Former President Donald Trump previously spoke out against TikTok parent ByteDance, but has since reversed his stance. A potential TikTok ban could be good news for rival social media companies like Meta Platforms (NASDAQ:META).
What Happened: Security concerns over Chinese owned ByteDance have led to discussions of TikTok being banned in the United States for years.
The latest move saw Congress and Biden sign legislation, which will likely be challenged by ByteDance. The legislation calls for ByteDance to sell TikTok to a U.S. company within 270 days or see the removal of the app from U.S. app stores.
Trump previously signed an executive order on Aug. 6, 2020, against the "threat posed by TikTok." Trump sought to have changes made to TikTok similar to those that were recently enacted. The order was later challenged in court.
The former president has flipped on his stance and now opposes a ban of TikTok, citing the potential that a ban could help Meta Platforms, a company Trump has spoken out against on several occasions.
"The spread in the United States of mobile applications developed and owned by companies in the People's Republic of China continues to threaten the national security, foreign policy, and economy of the United States. At this time, action must be taken to address the threat posed by one mobile application in particular, TikTok," Trump wrote in his 2020 executive order.
Investors who recognized the potential positive impact of a TikTok ban on Meta Platforms in 2020 by Trump's executive order could have bought the stock.
An investor could have purchased 3.75 shares of Meta Platforms with $1,000 based on a price of $266.60 on Aug. 6, 2020. The $1,000 investment would be worth $1,614.41 today, based on a price of $430.51 for META at the time of writing.
This represents a return of 61.4% over the last three and a half years.
For comparison, the same $1,000 investment in the SPDR S&P 500 ETF Trust, which tracks the S&P 500, would be worth $1,508.48 today based on a starting price of $334.46 and a price of $504.51 at the time of writing.
This represents a return of 50.8% over the last three and a half years, meaning an investment in META outperformed the S&P 500 over the same period.
Related Link: Conflict Of Interest? Congress Members Who Own META, GOOG, SNAP Shares Could Benefit From TikTok Ban
Why It's Important: TikTok could find itself a topic during the 2024 election with Trump reversing course on his opinion of banning the app.
"If you get rid of TikTok, Facebook and Zuckerschmuck will double their business," Trump said of Meta Platforms and its CEO Mark Zuckerberg. "I don't want Facebook who cheated in the last Election, doing better. They are a true Enemy of the People!"
While Trump's executive order was similar in nature against ByteDance, the former president has said that Biden is responsible for any ban of TikTok, a message he hopes voters remember in the 2024 election.
A ban of TikTok is not a definite conclusion. The company can sell the app to a U.S. company to skirt the ban.
Read Next: Why Did Donald Trump Change His Mind About TikTok? ‘Follow The Money’ Says Rep. Nancy Pelosi
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