Snap Shares Gain as White House Considers Ban of TikTok

Snap shares are higher as the White House mulls a ban on rival TikTok, worried that China might use the platform to spy and propagandize.
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Snap  (SNAP) - Get Report shares snapped higher Tuesday after Secretary of State Mike Pompeo said the White House may bar TikTok, the popular Chinese social-media platform, from the U.S. 

Snap is a competitor of TikTok. And the Trump administration is worried that China’s government will use TikTok, owned by Bytedance, as a tool to spy and spew propaganda.

"We are taking this very seriously and we are certainly looking at it,” Pompei told Fox News.

“We have worked on this very issue for a long time, whether it’s the problem of having Huawei technology in your infrastructure - we've gone all over the world and we are making real progress getting that out - and we declared ZTE a danger to American national security.”

Americans should be careful about using TikTok to avoid having their private information fall "in the hands of the Chinese Communist Party,” Pompeo said.

TikTok enables users to create short videos and overlay voices or music. In April, the TikTok app reached the 2-billion-download level, according to Sensor Tower.

A ban on TikTok would mean less competition for U.S. social-media platforms, including Snap’s Snapchat and Facebook, Morgan Stanley’s sales team wrote in a commentary cited by CNBC.

Meantime, Reuters reported that TikTok would stop operating its app in Hong Kong after China passed a restrictive new law governing the city. 

Morningstar analyst Ali Mogharabi said two weeks ago that Snap is overvalued. He pegged its fair value at $17.

Earlier in the year, he'd said, “ultimately, Snap's competition, which includes wide-moat Facebook  (FB) - Get Report with 2.5 billion users, is overwhelming.”

Snap shares recently traded at $25.14, up 7.3%. They have doubled over the past three months.