Social media platform TikTok has taken the world by storm in recent years. Bank of America analyst Justin Post took a look at just how much of an impact TikTok has single handedly had on existing social media companies.
The Numbers: TikTok has popularized the short-form video content format and generates more than 90 minutes of engagement per active user, well above the engagement levels of other social media platforms.
Post said TikTok is also the fastest-growing major social media platform and is expected to add 150 million global daily active users (DAUs) in 2022. TikTok has 60 million U.S. DAUs, and Post estimates TikTok is positioned to add about 20 minutes of daily use for each U.S. Internet user in 2022.
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The Losers: On the financial side, TikTok is expected to grow its advertising revenue by more than 170% this year to more than $12 billion. Post estimates ad revenue growth will create a 2.1% ad revenue growth headwind for TikTok's primary U.S.competitors this year, a significant growth hurdle for Snap Inc SNAP, Meta Platforms Inc FB and Alphabet Inc GOOG GOOGL.
Post said Facebook, Pinterest Inc PINS and even streaming companies like Netflix Inc NFLX could feel the impact of TikTok's growth, but its user base and advertising dollars overlap most significantly with Snapchat, Meta's Instagram and Alphabet's YouTube.
In addition to weighing on growth, TikTok's success has forced competitors to adapt their platforms to incorporate short-form video content. Meta Reels, YouTube Shorts and Snap Spotlight are the three biggest examples. A September 2021 survey of U.S. consumers found 48% prefer to watch short-form videos on TikTok followed by 25.3% that prefer YouTube, 20.1% that prefer Instagram and just 1.4% that prefer Snapchat.
Benzinga's Take: There are only so many hours in the day, so every minute TikTok users are spending on the platform is a minute they are not spending on competing platforms. Unfortunately for U.S. investors, TikTok's Chinese parent company ByteDance is a private company, making it impossible for U.S. investors to buy shares.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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