Analyst: Microsoft's purchase of TikTok makes “strategic sense”

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Microsoft is reportedly still interested in purchasing the US division of social network TikTok, and according to one analyst, this is actually a good idea.

According to Wedbush analyst Daniel Ives, the deal makes “strategic sense”, saying for Microsoft this would be a “big bet on the consumer social media space, which the company has stayed away from over the last decade”.

“With TikTok, valued in the private markets at roughly $50 billion, currently facing criticism from the Trump administration and on Capitol Hill around potential national security concerns this could be the right partner at the right time in Microsoft,” Ives wrote in a note to investors.

Ives noted that investors would take some time to get comfortable with this consumer path, but, with Azure growth flattening, that it would give Microsoft a new growth direction.

“Its consumer strategy remains in flux and an aggressive acquisition (or strategic investment) of TikTok would be Microsoft throwing its hat in the ring and trying to compete with other tech giants such as Facebook in a new avenue of growth for the next decade for its consumer business.”

The deal is currently in flux due to concerns that the US Government would prefer to shut TikTok down rather than see it sell its US stake, after President Donald Trump said late Friday he opposed the deal.

It appears most analysts who cover Microsoft support the deal, with the stock currently having a Strong Buy consensus scores 27 Buy ratings versus 3 Hold ratings, and with analysts suggesting Microsoft still has an additional 10% share price growth due this year.

via Yahoo Finance

More about the topics: china, microsoft, TikTok