The TikTok deal is here
Oracle just won the battle for TikTok.
After months of predictions and speculation, the bid for TikTok is finally moving forward. And it’s not with who you might expect. Now, this deal was a high-pressure one as the U.S. government has become increasingly concerned with TikTok’s collection of personal user data and its relationship with the Chinese government. The main concern was that the company could use the data it acquires for blackmail, corporate espionage, or track government employees.
This concern led to many large companies throwing their hat in the “TikTok partnership” ring – including Walmart and Microsoft. But neither of these heavyweight names came out on top. Instead, TikTok is teaming up with Oracle (ORCL) to solidify its continued business in the U.S. Oracle is an American computer technology corporation that sells database, software, and cloud engineered systems.
But when it comes to this deal, it’s more than just partnership that investors are paying attention too…
Where’s the money?
In case you didn’t know – TikTok has become one of the leading social platforms in a short amount of time. To put it in perspective, the app has well over 100 million users in the U.S. alone. And the users range across all ages.
Now, that might not seem like an important fact, but here’s the thing – this deal could make Oracle more visible to young consumers and give it control over a prominent advertising venue. And online advertising happens to be one of the biggest industries in the world – I would chalk this up as another win for Oracle.
And investors are too- seeing that Oracle’s stock jumped once the partnership news hit the airwaves. But before you follow the crowds, here’s what you need to know…
How can I get some?
I think it goes without saying, but the stock market is severely overbought. And I believe we’ll be seeing a lot of volatility leading up to at least the election. And that’s the exact reason why I have no intention of adding ORCL to my lineup.
Instead, I will be looking at the loser of the TikTok battle, Microsoft (MSFT). With the combination of the overbought market and Microsoft losing the bid, I think MSFT is set to go lower between now and the end of the year. And I genuinely believe that we are at a short-term top for the market and the technology sector.
So, how does one play MSFT with such a downturned market outlook? Out-of-the-money put spreads. The spreads will allow you to profit off the TikTok decision, all while respecting your risk tolerance and your bottom dollar.
In the spotlight: One of my favorite stocks…
TikTok and Oracle isn’t the only big deal happening. Nvidia has agreed to buy Arm Holdings, a designer of chips for mobile phones, from SoftBank. The agreement is worth $40 billion. The deal will include $21.5 billion in Nvidia stock and $12 billion in cash, including $2 billion payable at signing.
Arm is best known as the designer of an architecture used in chips found in most mobile phones. This included the Qualcomm chips used in most Android phones, as well as Apple’s iPhone. Apple is also planning to move its Mac computers from Intel chips to an Arm-based design.
So, it goes without saying that this was a big win for Nvidia. But it’s a good deal for SoftBank as well. SoftBank bought Arm many years ago. But the company has seen its finances collapse over the year and has lost money on companies like WeWork and Uber.
With this latest acquisition, Nvidia has moved up even higher on my watch list. This stock has always been one of my favorites, but this newest partnership and Arm’s growth potential make me believe that profit opportunities will be coming soon. And I’ll be sure to keep you updated.
I just shared with you the details on some major acquisitions that are showing signs of serious profit potential.
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