Meta Platforms’s Reels tool is likely to surpass ByteDance’s TikTok in short form video, according to investment firm Truist.
July 4, 2022
Meta Platforms’s Reels tool is likely to surpass ByteDance’s TikTok in short form video, according to investment firm Truist. Analyst Youssef Squali, who has a buy rating on Meta Platforms($NASDAQ:META) shares, noted that the combination of Meta Platforms and Instagram are likely to surpass TikTok in revenue by the end of 2023, which the analyst called an “impressive feat,” given how new the offering is.”While Meta continues to face meaningful headwinds from macro factors , changes to user privacy rules, and an expensive bet on a yet to be proven metaverse, we believe that the headwind of competition, especially from TikTok, is waning,” Squali wrote in a research report, adding that TikTok’s grip on short form video is “loosening.” By contrast, Google’s YouTube and Snap were “caught flatfooted,” though the analyst added that YouTube Shorts, which recently surpassed 1.5B users, is seen as “not far behind” in becoming the next contender. Squali noted that after essentially starting 5 years ago, TikTok has more than 1B monthly active users and generated over $20B in revenue in 2021, according to third-party estimates. So what does this mean for Meta Platforms’s market and earnings in the long term? He believes that this will help offset some of the other headwinds that Meta Platforms is currently facing. In addition, he believes that this could lead to even more users switching to using Meta Platforms as their primary social media platform. This could then lead to even more advertising revenue for Meta Platforms, which would be a major boost to their bottom line. So overall, it seems like this is good news for Meta Platforms investors. We’ll have to wait and see how things play out over the next few years, but it looks like Meta Platforms is in a good position to come out on top in the short form video wars.
This came as a relief to investors after a week of mostly negative news coverage surrounding the company.
VI app makes analyzing a company’s fundamentals easier, as seen below with Meta Platforms. The fair value of Meta Platforms stock is around $345.7, as calculated by VI Line. Currently, Meta Platforms stock is traded at $160, meaning it is undervalued by 53%.
This positive news for Meta Platforms caused the stock price to increase by 4.5% the following day. The main reason for this prediction is that Meta Platforms already has a large user base that it can draw upon to use Reels. In addition, Meta Platforms has been investing heavily in marketing Reels and making it easier to use. The negative news for ByteDance is that the Chinese government is cracking down on TikTok, which could lead to the app being banned in the country. This would be a huge blow to ByteDance, as TikTok is extremely popular in China. Overall, the positive news for Meta Platforms and the negative news for ByteDance make it a good opportunity to invest in Meta Platforms.
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