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"TikTok Has More Problems Than Opportunities, and If Oracle (ORCL) or Microsoft (MSFT) Buy It, They Become A Sell The Next Day"

Austin Smith

Published: February 5, 2025 3:06 pm

24/7 Wall St. Key Points:

• Microsoft (NASDAQ: MSFT) and Oracle (NYSE: ORCL) have been speculated as possible bidders for TikTok’s U.S. operations.
• With Facebook and Instagram covering many demographics, Meta (NASDAQ: META) is still the most dominant social media player in the United States.
• Any company acquiring TikTok at the stated $50 billion valuation could become a sell with regulatory and branding challenges.
• Forget TikTok and take a look at The Next Nvidia stocks instead. They could be the most exciting investments of 2025.

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Transcript:

[00:00:04] Doug McIntyre: TikTok, which was supposed to be closed down and the Supreme Court and President said close it down and then President Trump said we’re not going to close it down. What’s the future of that look like? I know that the, there’s an idea that the U. S. piece of this might somehow end up in U.S. hands. How does that look? What, who’s looking at it? Is it Microsoft? I mean, who’s looking at it? I,

[00:00:28] Lee Jackson: I hear a new voice on this every day. A couple of days ago, it was Oracle and Larry Ellison and, you know, the government taking a chunk of it, but then more recently, I’m hearing it. That Microsoft is involved in a purchase, and I think we’ve had this discussion that if anybody could benefit from TikTok, it would be some huge corporation that could like a Microsoft that could afford it, but does Microsoft really want to have social media as a part of their game You know, Azure and, and, and, and there are other products are a big part.

[00:01:05] Lee Jackson: So I’m not really sure. I think there’s a lot of balls in the air on this.

[00:01:09] Doug McIntyre: Well, I think there’s a reputation problem with owning TikTok, but I’m just saying you mentioned Microsoft. I understand that. Okay, maybe they’ve got the money, they’re in the tech industry, but I would look at these things.

[00:01:24] Doug McIntyre: Number one, why do you want to compete with Meta, who’s already got a huge lead, I think, across all their social media, they have 3 billion, 3 billion users, and you’re also competing with on X. And you know, so you have a bunch of competition. You have execution risk on this because you have to get rid of the algorithms, the Chinese use, the, but you have them, you got to find new algorithms, I expect.

[00:01:56] Doug McIntyre: But do you really want to own Something with hate speech, you know, something where there’s a lot of misleading information, something where there’s worries that, you know, foreign agents, whether it’s North Korea, Russia, try to hack into the thing, put false information there. I don’t see it for that reason and one other.

[00:02:18] Doug McIntyre: Microsoft’s core businesses, and this is the way it’s sold itself to Wall Street, We are in the cloud business and we’re moving into the AI business. We have a bunch of legacy businesses and you should love them and everything else, but the future of Microsoft is in these businesses. Basically all the other mega tech companies are singing a very similar tune.

[00:02:40] Doug McIntyre: Right. To me, this is a non core asset. So why do you want to buy something that has a reputation risk and that’s not a non core asset?

[00:02:51] Lee Jackson: Yeah, I agree. And the one thing that’s kind of interesting about this, and this is where Zuckerberg is smart, in that TikTok as a whole skews to a much younger audience, whereas Facebook skews to an older audience.

[00:03:06] Lee Jackson: Kids in their teens and 20s. They don’t use Facebook. I mean, they, they maybe have a Facebook page that they’ve had for 15 years, but way that Zuckerberg structured it with Instagram, you know, the, the young people are younger to people in their late twenties, early thirties than in their forties. They use Instagram, and so he’s got the demo covered better.

[00:03:30] Lee Jackson: And TikTok skews much younger and it’s, you know, it’s teenagers dancing and singing and, you know, influencing. And I just don’t know that that’s that it will ever change a whole lot from that. I mean, it’s cool. And I’ve seen cool stuff on TikTok. But, I don’t know if, if, if Microsoft would want to commit, it’s almost better for Oracle, I think, to commit to it than, than Microsoft, if you’re just thinking big tech, but yeah, there could be, there could be a lot of needles hidden in there and, and who knows.

[00:04:03] Doug McIntyre: Any big tech company that offers to buy this or it looks like they will where there’s any real money involved to me that turns that stock into a sell.

[00:04:12] Lee Jackson: Well, it’s not going to be cheap. I mean, we’ve heard 50 billion that ByteDance wants and they’re going to want to keep a chunk of it somehow. So, you know, do they, do they, do they, do they pay ByteDance a big chunk and then take it public?

[00:04:26] Lee Jackson: Or do they keep it private? I don’t know, but I’ll tell you one thing. I don’t think that the demographics of that are going to skew a lot higher to the, because yeah, there’s lots of kids on it and people make a lot of money on it, dancing and doing all that stuff, but the main thing that is good for Zuckerberg, especially for Facebook, is it skews older to people that have more money.

[00:04:49] Lee Jackson: And, you know, ultimately for any sort of media you want, you know, the 18 to 36 is great, but you really like the 35 to 55 demo because they have all the dough.

[00:05:01] Doug McIntyre: So my view of this is any megatech that buys this other than meta to me becomes a sell that day if they pay, you know If it’s a 50 billion dollar valuation, I’m a seller of Oracle.

[00:05:15] Doug McIntyre: I’m a seller of Microsoft if those things happen

[00:05:17] Lee Jackson: Yeah, and they and you know what? And you might want to see because whoever would buy it will probably skew higher initially and then probably trade d give it a little legs, let it go creep up a little bit. The interesting thing is in and back then, essenti son was like, listen man, you need to be longer to skew to the younger voter, and he did tremendous with the young in this vote. I mean, the last one that did really good with the young, I think, was George W. Bush, and that was 20 years ago. So, it’ll be really interesting to see how this plays out. But, they’ve bought themselves some times and you can bet because the way Wall Street runs and investment banking runs, they want to get a deal done.