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New social-media restrictions in Florida are likely to have some modest impact on companies catering to young users, Wells Fargo says, even if the effect isn’t completely clear.
Florida passed legislation Monday that prohibits some teenagers from holding social accounts. The state now blocks minors under 14 from having accounts at all, and allows 14- and 15-year-old users to have accounts with parents’ consent.
That should have a “modest impact on Snap (NYSE:SNAP) and TikTok (BDNCE) due to higher concentration of young users relative to peers,” analyst Ken Gawrelski wrote.
He estimates under-14 users from Florida make up about 3% of TikTok’s (BDNCE) U.S. daily active users — and while Snap doesn’t offer services to users under 13, there are “risks to 13-15-year-old cohort in Florida” due to the new law, he says, estimating that group at 480,000 DAUs (about 0.5% of Snap’s North American DAUs).
As for another youth-focused online name, Roblox (NYSE:RBLX), it’s unclear whether the new law applies, Gawrelski wrote.
“We believe RBLX is unlikely to be subject to these new restrictions, but highlight potential risks due to the vague definition of ‘social media platform,’ ” Gawrelski said.
If Roblox (RBLX) is considered social media in Florida, “we forecast a maximum impact of 1.8% and 0.4% on total bookings due to the loss of 13 & under and 14-15-year-old user cohort, which we estimate to be 2.9% and 0.6% of Roblox’s [U.S./Canada] DAUs, respectively.”
The new law isn’t set to take effect until Jan. 1. Meanwhile, there may be litigation that could end up delaying its implementation timeline.
