Why Meta Platforms stock (finally) gained ground Tuesday

The gains come courtesy of one of the company's biggest rivals.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Meta Platforms (NASDAQ: META) finally reversed their ongoing slump Tuesday morning, US time, climbing as much as 4.6%. By 2:22 p.m. ET, the stock was still up 3.8%.

The social media titan finally got some (potentially) good news, as government regulators consider banning one of the company's strongest competitors.

So what

A commissioner with the Federal Communications Commission (FCC), Brendan Carr, said in an interview with Axios that the Committee on Foreign Investment in the US (CFIUS) should ban short-form video platform TikTok. The company is currently in talks with CFIUS, which is charged with governing foreign companies operating in the US and conducting national security reviews. The regulatory body has been working to determine if TikTok should be spun off from its Chinese parent, ByteDance, in order to continue operating within the US. 

While the FCC itself has no regulatory authority over TikTok, as one of five commissioners at the FCC, Carr's opinion has a lot of sway in Washington, DC. Early last year, Carr recommended strong action against Chinese telecom companies, citing a "glaring security loophole" that permitted unsecured devices to operate on US networks. Acting on that warning, Congress passed the Secure Equipment Act of 2021, which gave the FCC power to effectively ban the use of telecom gear manufactured by Chinese companies Huawei and ZTE, which were viewed as a potential threat to national security. 

TikTok and the Biden administration are said to have come to a preliminary agreement to address these national security threats, but the Department of Justice has expressed concerns that the limitations framework doesn't go quite far enough to prevent TikTok's user data from being accessed by the Chinese government. The Treasury Department is also said to be skeptical of a potential deal.  

Now what

Meta Platforms has cited growing competition as one of several reasons for the company's back-to-back quarters of declining year-over-year revenue. CEO Mark Zuckerberg cited rival TikTok as the catalyst for Meta's focus on Reels, the short-form video option debuting across the company's social media platforms.

Nevertheless, Meta's willingness to adapt to a changing social media landscape has helped the company stay at the head of the class, making the stock a long-term buy.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Danny Vena has positions in Meta Platforms, Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Meta Platforms, Inc. The Motley Fool Australia has recommended Meta Platforms, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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