Oracle Wins Bid to Duet with TikTok's U.S. Operations
We are maintaining our fair value estimate for the company until we get further details.
On Sept. 13, various news sources, including The Wall Street Journal, revealed that wide-moat Oracle Corp. (ORCL) won the bid for TikTok’s U.S. operations, beating Microsoft. Oracle did not divulge any of the news firsthand, leaving much of the details of Oracle’s win in the dark. However, reports suggest Oracle will be TikTok’s partner in the U.S., which implies it is unlikely there will be a complete sale of the U.S. operations from TikTok’s parent company, ByteDance, to Oracle. We continue to view a complete Oracle-TikTok acquisition as more unfitting than not, given Oracle’s enterprise focus, but the idea of a partnership relationship is much more appealing, in our view. It is not immediately clear to us if this deal will satisfy the administration’s national security concerns--but Oracle’s close ties to the Donald Trump administration could help the review process, which the Committee on Foreign Investment is expected to undergo this week. We will be closely monitoring this situation for more details on the particularities of the partnership. However, with little definitive detail on the structure of the deal, we are maintaining our $50 fair value estimate--despite Oracle's stock up 4% on the news.
We continue to believe that a complete sale of U.S. TikTok assets to Oracle will have little top-line synergies, given Oracle’s enterprise focus and TikTok’s attention toward the consumer. We think Oracle’s designation as TikTok’s cloud infrastructure provider would be the main benefit for Oracle, as Oracle Cloud remains well behind AWS, Azure and Google Cloud. In this case, we think a partnership rather than an outright sale is much more beneficial to Oracle. A partnership would allow Oracle to gain TikTok as a major customer of Oracle Cloud, giving the U.S. government a sense of ease that Oracle will be securitizing TikTok’s U.S. data, all while Oracle does not have to invest the cash required to own the business outright.
|Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.|
Julie Bhusal Sharma does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.