Top Tech Stocks To Watch Amid The New TikTok Deal
Tech stocks that have a great focus on social media appear to perform relatively well amid the novel coronavirus pandemic. With most forms of business transactions now shifting online, there has never been a more important time for companies to be relevant on the internet. And when everyone rushes to the space to try selling their product and services, one not only has to be creative but also utilize the right channel.
This dynamic bodes well for the broader advertisement front. While conventional advertising such as roadside billboards are still attractive, online advertisements are increasingly important for success. And one of the hugely popular and profitable social media this year is TikTok. Not only kids love it, their grandparents too. TikTok has over 100 million users in the US alone. It’s not surprising to see why, given that it features the most engaging content.
But TikTok’s rise into stardom, especially in the U.S., has also led to increased scrutiny. TikTok is owned by Chinese tech company ByteDance. That connection raised concerns about how much access and influence the Chinese government has to user data and content moderation. Of course, the Trump administration has threatened to ban TikTok in the US. Previously, expectations were for ByteDance to sell TikTok’s US operations to a US company to avoid a ban. Now that the company seems to be finalizing its ‘restructuring’ deal, here are three top tech stocks you might want to include on your watchlist this week.
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Top Tech Stocks To Watch This Week: Oracle
First, up the list, Oracle (ORCL Stock Report) has been outstanding when it comes to deal-making. The company has been grabbing headlines for all the right reasons. From reporting good quarterly results to winning deals with McDonald’s (MCD Stock Report) and Albertsons Companies.
Over the weekend, the company took the market by storm by being selected as TikTok’s “trusted tech partner”. The question is, does this make Oracle the best tech stock to buy now? Investors should also bear in mind that this is different from an outright sale, a proposal that was initiated by Microsoft and Walmart (WMT Stock Report).
Now, there’s yet to be definitive information on the exact nature of the deal between ByteDance and Oracle. No matter how the media puts it, both Oracle and Bytedance still face several hurdles in order for the deal to be completed. Only if Bytedance is able to get a deal through the White House that doesn’t require an outright forced sale, then it would mark a major feat for both companies. ORCL stock will be interesting to watch in the near term as the company works on completing the deal.
Top Tech Stocks To Watch This Week: Fastly
Shares of Fastly (FSLY Stock Report) has been under considerable pressure lately. The stock reached all-time highs near $120 per share last month. But it later plunged abruptly after announcing in the latest earnings report that TikTok accounts for 12% of the company’s revenue. Now there’s a great chance that TikTok could continue its operation in the U.S., the cloud of negativity surrounding Fastly seems to be clearing up.
For the sake of argument, let’s assume that Fastly is going to completely lose TikTok, this would not invalidate the huge growth potential many investors saw in Fastly. The cloud company can still achieve revenue growth of above 30% in the coming years.
Fastly has a scalable business model and it has lots of opportunities to go into. It has just acquired Signal Sciences recently. No one can be exactly sure what the Oracle-TikTok partnership means for the companies involved, but it sure sounds like TikTok is here to stay. Whatever happens to TikTok, Fastly remains as a top cloud stock to watch.
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Top Tech Stocks To Watch This Week: Microsoft
Oracle’s apparent victory is a blow to Microsoft (MSFT Stock Report), which had been gunning for TikTok for weeks. Some analysts described Microsoft’s proposed acquisition of TikTok as a potential “coup”. After all, this is an opportunity to pick up a fast-growing social media platform. This is in addition to Microsoft being one of the few companies with a balance sheet sufficient to make an outright acquisition.
While Microsoft may have lost an opportunity to acquire the fastest growing social media company, the truth is, it doesn’t hurt the company materially. Microsoft has been on a tear over the last couple of years. And the pandemic has only solidified its position further.
Together with its strong cash position, there could be solid dividend growth in the coming years. And if you are a dividend hungry investor, MSFT stock seems like a good stock to own. This is considering the company is planning for a 10% dividend hike later this month.