Club holdings Meta Platforms (META) and Amazon (AMZN) are in the news Tuesday. Here are the headlines along with our Club take for each. Potential TikTok ban’s impact on META META 1Y mountain Meta’s performance over the last 12 months The news: TikTok on Thursday confirmed that the Biden administration has demanded its Chinese parent ByteDance sell its stake in the short-form video platform, or face a possible ban in the United States. The U.S. has previously expressed concerns that the app presents a national security risk, as American user data is exposed to the Chinese government. Moreover, the UK announced plans Thursday to ban TikTok . India permanently banned the app in June 2020 and other governments around the world are also considering this move due to user data and privacy issues. TikTok has seen robust growth since it launched in 2016, competing with Reels at Meta Platforms (META) and Alphabet ‘s (GOOGL) YouTube Shorts. The possibility of TikTok getting banned is low, said Barton Crockett, analyst at Rosenblatt Securities, but added it would be a “windfall” for Meta if it happened. Without a ban, TikTok is a “juggernaut” that could keep gaining market share. “It’s highly probably that TikTok remains a meaningful competitor for Meta, Facebook [and] Instagram.” Shares of META were trading 1.5% higher Thursday at roughly $200 apiece. The Club’s take: Jim Cramer said Thursday the “cards are lining up against TikTok.” A potential ban of the app would likely lead to a boost in engagement for Reels and Shorts. That, in turn, could attract more ad dollars to these platforms, which are already under pressure in a weakening economy. Overall, we see the social media giant heading in the right direction as it consistently seeks ways to acclimate to the new economic environment. Its recent corporate restructuring, headcount reductions and cuts to capital and operational expenses are in line with CEO Mark Zuckerberg’s commitment to make 2023 the “year of efficiency,” which should support revenue and earnings growth. JPMorgan cautious on Amazon AMZN 1Y mountain Amazon’s performance over the last 12 months. The news: JPMorgan said investor sentiment on Amazon (AMZN) stock is near multi-year lows, in a research note Thursday. Analysts highlighted that over the past three years, AMZN stock has gained 14%, underperforming the S & P 500’s 63% return over the same period. The main concern was the deceleration in revenue growth in the company’s cloud unit AWS. Analysts said the slowdown is driven by the weaker economy and that growth will return once it improves. Still, the firm lowered its 2023 AWS revenue estimates by 2.3% to $88.4 billion. At the same time, analysts project operating income from Amazon’s North America operations to improve margin expansion this year. They also anticipate the company will reduce capital expenditures, which should support its free cash flow. JPMorgan kept an overweight rating on AMZN stock, but lowered its price target to $135 from $142. Shares of AMZN were trading 4.5% higher on Thursday to $100 per share. The Club’s take: While we’re concerned over the deceleration in AWS, it’s still a market-leading platform that has more room for growth as companies migrate to the cloud. As we’ve said before, Amazon needs to follow in Meta’s footsteps and cut more costs. The e-commerce giant overexpanded its warehouse and data center space over the pandemic to meet consumer demand, but now it needs to right size its operations. The company today is trying to figure out how much to cut without impacting delivery times. Once that’s determined, “Amazon is a buy,” Jim said Thursday. (Jim Cramer’s Charitable Trust is long META, GOOGL, AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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Club holdings Meta Platforms (META) and Amazon (AMZN) are in the news Tuesday. Here are the headlines along with our Club take for each.
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