JPMorgan defends Amazon, TikTok faces ban — our Club takes on the news

Tuesday's news features include Meta Platforms (META), Club holdings, and Amazon (AMZN). Below are the headlines and our Club take on each. Impact of TikTok ban on META META 1Y mountain Meta's performance in the past 12 months. The news: TikTok confirmed Thursday that the Biden administration demanded ByteDance, its Chinese parent, sell its stake in the platform. Otherwise, the United States could ban the app. As American user data is available to the Chinese government, the U.S. previously raised concerns about the app's national security. The UK also announced Thursday that it will ban TikTok. India banned the app permanently in June 2020. Other governments around the globe are also looking into this move because of privacy and user data concerns. TikTok's growth has been impressive since its launch in 2016. It competes with Reels at Meta Platforms, (META), and Alphabet's (GOOGL), YouTube Shorts. Barton Crockett of Rosenblatt Securities said that the possibility of TikTok being banned is very low. However, he added that it would be a "windfall for Meta" if it did happen. TikTok could continue to gain market share even if it is banned. "It is highly probable that TikTok will continue to be a significant competitor for Meta [and] Instagram." META shares traded 1.5% higher at around $200 per share on Thursday. The Club's view: Jim Cramer stated Thursday that TikTok is facing stiff competition. The possibility of the app being banned would likely result in a rise in engagement for Shorts and Reels. This could lead to more advertising dollars for these platforms which are already under severe economic pressure. We believe that the social media giant is moving in the right direction, as it continues to seek ways to adapt to the changing economic environment. Recent corporate restructuring, headcount cuts and capital and operational expense reductions are consistent with CEO Mark Zuckerberg’s pledge to make 2023 "year of efficiency," which should help revenue growth and earnings growth. JPMorgan defends Amazon AMZN1Y mountain Amazon's performance in the past 12 months. In a research note, JPMorgan stated that investor sentiment regarding Amazon (AMZN stock) is at its lowest level in over a decade. Analysts noted that AMZN stock had risen 14% over the last three years, which is less than the S & P 500's 63% annual return. The company's cloud business AWS has seen a slowdown in revenue growth. This was the main concern. Analysts believe that the slower growth is due to the weaker economy. Once it improves, however, analysts say the slowdown will be reversed. The firm still reduced its 2023 AWS revenue estimates of 2.3% to $88.4 Billion. Analysts also expect operating income from Amazon North America to increase margin expansion in the coming year. Analysts also expect that Amazon will decrease capital expenditures which should help its free cash flow. JPMorgan maintained an overweight rating for AMZN stock but decreased its price target from $142 to $135. AMZN shares traded 4.5% higher at $100 per share on Thursday. The Club's view: Although we are concerned about the slowdown in AWS, AWS is still a market-leading platform with more potential for growth as companies move to the cloud. We've already said that Amazon must follow Meta's lead and reduce costs. Amazon, the e-commerce giant, overextended its warehouse and data center space to meet consumer demand. Now it must right-size its operations. Today, the company is trying to determine how much it can cut without affecting delivery times. Jim stated Thursday that Amazon is now a buy once this has been determined. (Jim Cramer’s Charitable Trust has META, GOOGL and AMZN. For a complete list of stocks, please see here. You will be notified by CNBC Investing Club member Jim Cramer when Jim executes a trade. Jim waits for a trade alert to be sent before buying or selling stock from his charitable trust portfolio. Jim may wait 72 hours after issuing a trade alert to execute a trade if he has discussed a stock on CNBC TV. OUR TERMS, CONDITIONS, AND PRIVACY POLICY APPLY TO THE ABOVE INVESTING CLUB INFORMATION. NO FIDUCIARY OBLIGATION, DUTY, EXISTS OR IS CREATED BY YOUR RECEIPT ANY INFORMATION CONNECTED WITH THE INVESTING CLUB. NO PROFIT OR SPECIFIC OUTCOME IS GUARANTEED.

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Meta Platforms

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(AMZN), are featured in the news Tuesday. These headlines are accompanied by our Club take on each.