Over 4 in 5 Americans report using a Meta app daily—and those figures could soar if TikTok gets booted

Good morning. With Meta set to report Q1 earnings on Wednesday, Fortune spoke with a top analyst to get a better sense of what investors may be looking for in the firm's latest quarterly report.

In a recent note to investors, Scott Devitt of Wedbush Securities, while keeping his outperform rating on Meta, raised his price target to $570 from $520, while also noting that Meta provided notably strong forward guidance for Q1.

It's a forecast bolstered by the company's strength in digital advertising and more internet users turning to Meta’s apps. According to Wedbush’s latest Consumer Internet Survey, which included responses from more than 1,000 people in the U.S., YouTube, Facebook, and Instagram are the most likely to see increased user engagement this year, and that's with over 80% of respondents saying they already use a Meta product (Facebook, Instagram, or Whatsapp) multiple times per day.

In Q4 2023, Meta’s “family of apps” ad revenue was $38.7 billion, up 24% from a year earlier. “Within ad revenue, the online commerce vertical was the largest contributor to year-over-year growth, followed by CPG and gaming,” CFO Susan Li said on Meta's Feb. 1 earnings call. That advertising boost helped total revenue to grow 25% year-over-year to $40.1 billion for the quarter, up from $32.2 billion.

Social media companies have been top of mind. On Saturday, the House passed legislation that could ban TikTok in the U.S. if the platform’s China-based owner, ByteDance, doesn’t divest its ownership stake within a year.

Wedbush’s survey also asked consumers who regularly use TikTok which social media app they'd turn to as a potential replacement, with 60% pointing to either Facebook or Instagram as the most likely alternatives. After Facebook and Instagram, 19% of those surveyed said they'd replace TikTok with YouTube.

Consistent with the survey results, Devitt said, “We would expect Meta to be the primary recipient of redistributed TikTok revenue should the company exit the U.S., with Google the likely number two beneficiary.”

Google is set to report earnings on Thursday.

Sheryl Estrada
sheryl.estrada@fortune.com

María Soledad Davila Calero curated the Leaderboard and Overheard sections of today’s newsletter.

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