Facebook and Snap have reportedly held talks to buy Dubsmash, a lip-syncing video app that has surged in popularity alongside rival TikTok.
Dubsmash was approached by both Facebook (FB) and Snap about a deal in recent weeks, according to a report by The Information. The acquisition talks progressed far enough to include discussions of a price tag in the hundreds of millions of dollars. However, although the talks were ongoing in “recent weeks,” the discussions are no longer active, according to the report.
The talks come as Microsoft Corp (MSFT) said this month that the tech giant is continuing negotiations to buy the US operations of the video-sharing app TikTok after talking to President Trump. Before the talks Trump had said that he preferred to ban the app over security concerns due to its Chinese ownership and wouldn’t support a sale. Now, Trump has given TikTok until Sept. 15 to complete sale talks or face a ban.
Furthermore, Twitter Inc. (TWTR) has reportedly held preliminary talks to buy the US operations of TikTok. The threat by the US government to ban TikTok has increased the appeal for other large tech companies to snap up rival apps or develop their own video-sharing features and apps.
TikTok CEO Kevin Mayer recently attacked Facebook for developing “copycat” products.
“Facebook is even launching another copycat product, Reels (tied to Instagram), after their other copycat Lasso failed quickly,” Mayer said. “But let’s focus our energies on fair and open competition in service of our consumers, rather than maligning attacks by our competitor – namely Facebook – disguised as patriotism and designed to put an end to our very presence in the US.”
Meanwhile Facebook is also facing scrutiny from the US government. Its CEO Mark Zuckerberg late last month provided testimony before a US congressional hearing to discuss allegations related to the dominance of the social online platform and whether the company is abusing its market power or stifling their competitors.
Shares in Facebook have surged 27% this year as the social media network has been benefiting from a user boom during the coronavirus pandemic, which accelerated the need for remote social engagement as well as for online business and working tools.
Looking ahead, the $287.12 average analyst price target implies shares could advance more than 10% in the coming 12 months.
Mizuho Securities analyst James Lee this week raised the stock’s price target to $315 (21% upside potential) from $285 and maintained a Buy rating on the shares. Lee believes that the likely sale of TikTok is a positive for Facebook, as it recently launched a competitive product – Instagram Reel – to capitalize on TikTok’s uncertainty in the US.
Overall Wall Street analysts have a bullish call on Facebook. The Strong Buy consensus boasts 31 Buy ratings versus 4 Hold ratings and 1 Sell rating. (See Facebook stock analysis on TipRanks).
Related News:
Facebook Soars 6% After-Hours On Strong Beat, Ad Resilience
Google To Ban Ads Promoting ‘Dangerous Content’ On Covid-19 Theories
Facebook: COVID-19 and Ad Boycott Result in Top Analyst Slashing Estimates
