Meta, Alphabet ETFs Outperform as TikTok Ban Nears

Single-stock ETFs tied to Meta and Alphabet have been performing well as the chances of a TikTok ban rise.

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sumit
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Senior ETF Analyst
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Reviewed by: Paul Curcio
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Edited by: Kiran Aditham

TikTok isn’t a company that U.S. stock and ETF investors typically focus on. Owned by ByteDance, a private Chinese company, there’s currently no way for most individuals to invest in it.

However, as the U.S. moves closer to a potential TikTok ban, one corner of the exchange-traded fund world is starting to feel the impact.

Single-stock ETFs tied to Meta Platforms Inc. and Alphabet Inc. have been fluctuating based on the odds of a TikTok ban.

The two companies own social media platforms that would benefit from the demise of one of their fiercest competitors. 

The chance of a TikTok ban surged as high as 75% on Jan. 11, up from 32% on Jan. 6, according to prediction market Polymarket, as news reports suggested that the United States Supreme Court is reluctant to halt the ban of the app.

In April, President Biden signed a law that would block TikTok from operating in the U.S. unless its parent company ByteDance sold it by Jan. 19.

Lawmakers and the Biden administration have expressed concerns that the Chinese government could steal Americans’ data and influence their views by forcing ByteDance to tweak its algorithms. 

Meta, Alphabet ETFs Excel

Shares of both Meta and Alphabet have outperformed the S&P 500 as the chances of a TikTok ban have shot up.

The Direxion Daily META Bull 2X Shares (METU) and the GraniteShares 2x Long META Daily ETF (FBL) have $55 million and $147 million in assets under management, respectively, while the Direxion Daily GOOGL Bull 2X Shares (GGLL) has $162 million in AUM.

Meta operates the social media platforms Facebook and Instagram, while Alphabet owns YouTube.

Both of those platforms could see increased engagement if TikTok is banned. A TikTok ban “could boost Meta's overall revenue by more than 5%, starting mid-year,” according to a post on X from Gene Munster, Deepwater Asset Management.

The impact on Alphabet could be smaller given the dominance of search in the company’s overall business. YouTube revenues, for instance, comprised just around 10% of Alphabet’s total revenues in the third quarter.

Still, a shutdown of TikTok could have a noticeable impact on the tech giant’s top and bottom lines. 

Not a Done Deal 

That said, as Polymarket probabilities suggest, the end of TikTok in the U.S. isn’t a done deal.

Incoming President Donald Trump has said that he wants to save the app. Advisors close to the president-elect say that he could issue an executive order in the first days of his administration to stop the ban of the app.

But since Trump enters office a day after the TikTok ban deadline, it’s unclear how that would work or whether Trump actually has the authority to stop the ban without support from the Supreme Court.

Investors in Meta and Alphabet single-stock ETFs will surely be following the saga closely. 

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.

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