Facebook Stock Rise Approached With Caution, Even With Launch Of Instagram Reels

Facebook Stock Rise Approached With Caution, Even With Launch Of Instagram Reels

Last week’s news that Facebook was showcasing a new Instagram update, named Reels, came at the perfect time for them. Instagram Reels lets users create shorter videos with special effects videos similar to TikTok.

Facebook’s news came simultaneously with new sanctions imposed on China by the US government. Counting in Thursday’s executive order prohibiting U.S. firms from handling business with ByteDance, the Chinese owner of TikTok.

Outcry Around the Globe

TikTok is being critiqued for months now due to the geopolitical tension between the USA policymakers and the Chinese Communist Party.

The application for sharing videos is seen as a threat to privacy and safety due to its Chinese origins, with federal workers prohibited from applying government-issued gadgets.

Facebook could’ve seen a chance in the middle of this situation.

Facebook logo - stock

Following the release of Reels in the States, the Facebook stock increased by 6.5 percent. As Trump’s executive order says that in 45 days, any transfer by any persona with ByteDance Ltd will be vetoed.

It is not possible for the government to remove the popular app from the phones of millions of US citizens. However, the executive order can stop them from downloading the application.

Political Hazard

It’s hard to assess how this will end. Rumor has it that Microsoft is talking about buying the application in a multi-billion pound transaction. The widespread use of TikTok might be hard for Facebook to challenge if the deal comes to be.

Besides, TikTok content creators with tens of millions of followers are still showing loyalty to the application for the time being. No matter the government’s security issues.

Facebook also frequently puts out updates resembling those of its competitors, some of which were not as successful. Lasso and Hobbi are a couple of instances, both of them removed this year.

The short-term climb of Facebook due to this news needs to be treated with care. What will decide Reels’ success will be if TikTok’s content creators will be willing to move in a majority to Instagram.