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Trump Says TikTok Deal To Pass On ‘Zero Security Risk’ Condition – Report

support@smarteranalyst.com (Ben Mahaney)
·2 mins read

President Donald Trump said in a Fox News interview on Monday that he would not approve the TikTok deal, if its Chinese parent ByteDance retains control.

Trump’s comments cast some doubt on the potential that Oracle and Walmart will get approval to acquire a 20% stake in TikTok Global, which would be a newly formed US- based company. Trump had demanded ByteDance to divest its US operations.

Trump had approved the TikTok deal “in concept” on Sept. 19, after which software giant Oracle (ORCL) announced its plans to snap up a 12.5% interest in TikTok Global. According to the terms of the deal, Oracle would become TikTok Global’s “secure cloud technology provider.”

Retailer Walmart (WMT) would take a 7.5% stake in TikTok’s US business and will provide e-commerce, payments and fulfilment services to the new company.

However, ByteDance issued a statement on Monday morning saying that it will retain 80% ownership in TikTok after selling a total of 20% to Oracle and Walmart. He also said the board of TikTok Global would include the founder of Bytedance and the current directors of Bytedance, as well as the CEO of Walmart.

Trump warned "Everything is going to be moved into a cloud done by Oracle, it's all through the cloud. And it's going to be totally controlled by Oracle ... and if we find that they don't have total control, then we're not going to approve the deal. It's going to bring 25,000 jobs, and it's going to be located in Texas." (See ORCL stock analysis on TipRanks).

Needham analyst Jack Andrews maintained a Hold rating on Oracle stock on Sept. 21, as he anticipates modest revenue impact from the deal.

“While it is difficult to gauge the ultimate financial gain as a result of the investment, our previous work estimated a more modest revenue impact from hosting fees for OCI [Oracle Cloud Infrastructure]," Andrews wrote in a note to investors. "Nonetheless, we believe the addition of yet another marquee cloud reference customer may help further momentum with large enterprises.”

Currently, the Street has a cautiously optimistic outlook on Oracle. The Moderate Buy analyst consensus is based on 8 Buys, 11 Holds, and 1 Sell. The $61.69 average price target implies upside potential of 1.4% to current levels. Shares have increased 14.8% year-to-date.

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