Warning, warning. Is Tik Tok a ticking time bomb?
By Michael E. Russell
Let us talk about Tik Tok. Americans spent over 50 billion hours on this App during 2022. It is perhaps one of the fastest growing businesses in the world today. This company generated $9 billion in revenue last year with analysts projecting more than $14 billion this year. This is a ten fold increase since 2020.
A short tutorial. Tik Tok is a subsidiary of Byte Dance which is China based. Are we getting a little uncomfortable yet? Tik Tok CEO Shou Zi Chew spent 5 hours on the hot seat testifying before the House Committee on Energy and Commerce. Not a comfortable place to be. Representative Cathy McMorris Rodgers, a Republican from Washington State, stated that Tik Tok is “a tool to manipulate America” forcefully declaring it should be banned. During the hearing it was asserted that Chinese President Xi Jinping is the real power behind Tik Tok.
Shockingly, both sides of the aisle don’t believe that Chew’s testimony stating that Tik Tok is not an agent of China rings true. Both Democrats and Republicans see Tik Tok as a geopolitical and social media risk.
Something has to give. It is highly unlikely that the status quo will remain in place. A possibility is that Tik Tok is banned. First Amendment problem? Another is an outright sale. In that case, Meta, Alphabet and Snap could be potential big winners. Just a note: 95 million Americans use Tik Tok daily for an average of 90 minutes a day. No wonder our kids are not outside riding their bikes. This situation should be followed closely by all of us. Banning Tik Tok and other Chinese based apps will certainly lead to retaliation on U.S. companies. However, the Congress sees Tik Tok and other social medias as increasingly dangerous to the mental health of our youth. To be continued.
How about this market!
Silicon Valley Bank and Signature Bank self-destructed. UBS Group, my former employer, took over Credit Suisse in order to keep it from collapsing. A Swiss Bank, really!
In spite of the banking sector getting pummeled, the Nasdaq had its best quarter since 2020, up 17%. A stock I have been touting, Nvidia is up 101 points in 3 months, not too shabby. Back to the banks. With investors wary about depositing money in banks due to the government selectively choosing which accounts to insure, where do we put our money? Some investors have moved back into the crypto-currency market. UGH, short term memory.
We have witnessed Sam Bankman Frieds FTX exchange crash this past June. Crypto has given us a year full of scams, arrests, bankruptcies and billions in lost value. In spite of these spectacular events, crypto currencies such as Etherium and Bitcoin are up 40% this year, i.e., Bitcoin was at a low of 16,700 early January closing this past Friday at 28,716. For the life of me, I am having trouble calculating these numbers on my abacus … not enough beads.
In closing, let me speak to the tragic loss of Dr. Mark Funt, my daughter Sarah’s father-in-law. Mark was a great presence in our community. A highly skilled physician, loving husband, father, and a special Poppy to his grandchildren. He will be sorely missed. We love you MIF.
Michael E. Russell retired after 40 years working for various Wall Street firms. All recommendations being made here are not guaranteed and may incur a loss of principal. The opinions and investment recommendations expressed in the column are the author’s own. TBR News Media does not endorse any specific investment advice and urges investors to consult with their financial advisor.
