The online economy is about to take another shift soon. More influencers and advertising budgets saw unparalleled opportunity in Bytedance’s up-and-coming platform, TikTok; however, its days in the U.S. market are now ticking. After passing a bill that would force Bytedance to spin off TikTok to avoid granting U.S. user data to the Chinese government, a five-month window to decide will spur a new set of winners.

The truth is that TikTok is winning in all statistics against its major competitor, Instagram. As Meta Platforms Inc. (NASDAQ: META) realizes the opportunity it could have if TikTok abandons the arena, the company may increase its research and development (R&D) budgets to turn its ship around.

On another note, Alphabet Inc. (NASDAQ: GOOGL) sees the opportunity in short-form content as its YouTube platform now hosts ‘Shorts’. Which of these two takes the lion’s share of potential TikTok users looking for a new home? Only the market can answer that.

Meta Has Its Spoon Ready

As of 2022, an average of 17.6 million hours were spent per day watching Instagram Reels. This compares to a more than ten times larger 197.8 million hours on average spent on TikTok daily.

Math is a double factor affecting user count and time spent per user. The average TikTok user spends roughly 52 minutes daily on the platform. In comparison, the statistic goes down to 30 minutes daily on Instagram.

Despite Instagram having more than 2 billion monthly active users, more than 1 billion more than TikTok, the math shows that people prefer to stay on TikTok longer.

All of this matters because if TikTok were erased from the list of available apps in the U.S. market, many users would need to find a new home in the next player down the food chain. This happens to be Instagram, but this trend may already be priced into the stock today.

Markets don’t wait for the news to appear; they shift their money and predict tomorrow’s newspaper. This is why Meta stock trades at 97% of its 52-week high and a price-to-earnings (P/E) ratio 25.5x. Its valuation makes it 17% more expensive than Alphabet’s 21.8x P/E valuation.   

Is Google the Better Play?

Wall Street doesn’t think it is. Following how analysts have expressed their views in both Meta and Alphabet, you too can probably guess who the likely winner is in this battle.

Analysts at Wells Fargo & Co. (NYSE: WFC) see a price target of $144 a share for Alphabet, set as of March 2024. Meanwhile, these same Wells Fargo analysts saw a $609 valuation for Meta in the same month. These two price targets translate to a 2.3% downside in Alphabet and a 20% upside in Meta.

Now that the choice is clear amongst those who make a living predicting the future price of stocks, it’s time to see if the market agrees. Because there is a 17% premium in Meta’s P/E to Alphabet’s, the conclusion is that there must be a good reason for the willingness to overpay.

While both stocks saw institutional buying, the trend clearly favors Meta over Alphabet. It may be their own way of backing both horses in case they are wrong because the Vanguard Group favored its Meta position by adding 1.7% to it as of March, while only 1.3% for Alphabet.

Another respected Wall Street firm is Fisher Asset Management. This one had its own opinions of Meta versus Alphabet. By increasing its positions in Meta by 8.1%, it let its preference be known, as it only chose to add 3.3% to Alphabet instead.

It seems that, to these institutions, Meta is the one to come out a winner from this debacle, while Alphabet acts as a hedge in case that they are wrong in this call.

What Can You Do?

Some argue that TikTok has selling and marketing capabilities for businesses that Instagram doesn’t. They may be correct, but they also forget that Meta owns WhatsApp. This app does support store and business pages within the same Instagram environment.

There lies the hidden opportunity these analysts and asset managers spotted. While still a speculative thought, it is not far from the reality that today’s online economy – and nomad workers – could adopt. After all, 197.8 million daily hours of consumer activity will be filled.

After all, while Alphabet performed hand-in-hand with the rest of technology stocks, Meta outperformed the Technology Select Sector SPDR Fund (NYSEARCA: XLK) by as much as 106% over the past 12 months. Price action is often right, and so is Wall Street.