TikTok isn't a company that U.S. stock and ETF investors typically focus on. The company is owned by private Chinese company ByteDance and is currently inaccessible to most individuals.
However, as the U.S. inches closer to a TikTok ban, one corner of the ETF world is starting to feel the impact.
Single-stock ETFs tied to Meta Platforms Inc. and Alphabet Inc. have been volatile based on the possibility of a TikTok ban.
The two company-owned social media platforms stand to benefit from the demise of one of their fiercest rivals.
According to prediction market Polymarket, the likelihood of TikTok being banned on January 11 surged to 75% from 32% on January 6, amid news reports that the U.S. Supreme Court was unwilling to end the ban on TikTok. app.
In April, President Biden signed a law banning TikTok from operating in the United States unless its parent company ByteDance sells it by January 19.
Lawmakers and the Biden administration have expressed concern that the Chinese government could steal Americans' data and influence their views by forcing ByteDance to tweak its algorithms.
Shares of both Meta and Alphabet have outperformed the S&P 500 as the possibility of a TikTok ban grows.
this Direxion Daily META Bull 2X Stock (METU) and GraniteShares 2x Long META Daily ETF (FBL) Assets under management were US$55 million and US$147 million respectively, while Direxion Daily GOOGL Bull 2X Stock (GGLL) It has US$162 million in assets under management.
Meta operates social media platforms Facebook and Instagram, while Alphabet owns YouTube.
If TikTok is banned, engagement on both platforms is likely to increase. An article published on X by Gene Munster of Deepwater Asset Management said that the TikTok ban "could increase Meta's overall revenue by more than 5% starting in the middle of the year."
The impact on Alphabet is likely to be smaller, given the dominance of search in the company's overall business. For example, YouTube's third-quarter revenue only accounted for about 10% of Alphabet's total revenue.
Still, TikTok's shutdown could have a significant impact on the tech giant's top and bottom lines.
Still, as Polymarket probabilities indicate, TikTok's end in the U.S. is not yet certain.
Incoming President Donald Trump has said he wants to save the app. Advisers close to the president-elect say he may issue an executive order halting the app's ban on his first day in office.
But with Trump taking office a day after the TikTok ban deadline, it's unclear how that will work or whether Trump actually has the authority to halt the ban without Supreme Court support.
Investors in the Meta and Alphabet individual stock ETFs will certainly be watching this event closely.