The future of TikTok in the United States is uncertain as President Joe Biden has signed a bill requiring ByteDance, the platform’s Chinese parent company, to sell the app or face a ban. This has raised concerns for Oracle, one of TikTok’s largest clients in the technology sector, as a ban could negatively impact its results and stock price. While Oracle’s stock closed down 0.5% today, the company has seen a successful year with YTD profits of over 33%.
Morgan Stanley estimates that a TikTok ban could result in losses ranging from $370 million to $1.3 billion for Oracle. The company has acknowledged in its annual report that compliance with these policies could lead to higher expenses and negatively impact revenue and profits. However, analysts have differing views on the potential impact of a TikTok ban on Oracle.
JPMorgan Chase analyst Mark Murphy believes that a ban may not be a major issue this year but could become one in the future. UBS analyst Karl Keirstead suggests that while a ban would hurt Oracle, its cloud business is strong enough to withstand the loss of TikTok as a customer. Oracle’s cloud infrastructure revenue has been growing steadily, showing its resilience in the face of competition.
Overall, although a TikTok ban may cause a short-term decline in ORCL stock, Oracle is well-positioned to recover in the long run. The company’s strong cloud business and partnerships with other technology giants like Alphabet and Open AI provide a solid foundation for future growth. It is also possible that TikTok could find a buyer in the US and avoid a ban altogether. Samuel O’Brient, a reporter at InvestorPlace, emphasizes the importance of following political news that could impact investors.
Article Source
https://investorplace.com/2024/06/orcl-stock-alert-is-a-tiktok-ban-enough-to-kill-oracle/