ORCL Stock Alert: Is a TikTok Ban Enough to Kill Oracle?
TKFFF · 2024-06-26 15:55
- Oracle (ORCL) is concerned about the prospect of a TikTok ban in the United States.
- The social media giant is one of the cloud company’s top customers.
- If a U.S. ban moves forward, the company fears that its bottom line could be significantly impacted.
What’s Happening With ORCL Stock?
Granted, ORCL stock didn’t fall by too much today, closing down by 0.5%. That’s not much of a decline. Even so, investors should be careful to evaluate what this means for the company. Oracle has enjoyed an excellent year, with year-to-date (YTD) gains of more than 33%. But in a U.S. economy without TikTok, the company would be forced to shoulder some losses.Jeff Bezos’s Plan Exposed
Located 30 miles from Baltimore — Jeff Bezos has been quietly investing in one tiny company that’s ground zero of a technology revolution that’s going to change everything. Bank of America said the technology would be, “Bigger than fire and bigger than all the revolutions that humanity has seen.” One Wall Street bank provided an estimate as to exactly how much the TikTok ban would hurt Oracle. According to Morgan Stanley, the losses could range from $370 million to $1.3 billion. Oracle addressed this topic in its annual report:“If we are unable to provide those services to TikTok, and if we cannot redeploy that capacity in a timely manner, our revenues and profits would be adversely impacted.”The company added that complying with these policies could lead to higher expenses, which could also negatively impact ORCL stock. But some Wall Street analysts are less concerned with the looming TikTok ban. JPMorgan Chase analyst Mark Murphy speculates that a potential ban would likely not be a major problem this year but could become one further down the line. Meanwhile, UBS analyst Karl Keirstead believes that, while the ban would harm Oracle, it may not destroy the company’s cloud infrastructure prospects.
What It Means
It isn’t surprising that Oracle is highly concerned about the prospect of TikTok being banned in the States. But Keirstead is correct that the company’s cloud business is big enough to withstand losing one of its biggest customers. Oracle has other things going for it, such as lucrative partnerships with Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and OpenAI. As InvestorPlace contributor Vandita Jadeja reports: “Once popular for database management, Oracle is now expanding its cloud business and has seen an impressive demand. Its cloud infrastructure revenue hit $2 billion, up 42% year-over-year in the recent quarter and the outstanding performance obligations soared 44% and stood at $98 billion. This shows the company’s strength amid the rising competition.” While a TikTok ban would likely push down ORCL stock in the short term, the company is clearly strong enough to ultimately recover. What’s more, it’s also possible that TikTok finds a buyer in the U.S. and avoids the ban entirely. On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. 文章来源: 文章该内容为作者观点,TKFFF仅提供信息存储空间服务,不代表TKFFF的观点或立场。版权归原作者所有,未经允许不得转载。对于因本网站图片、内容所引起的纠纷、损失等,TKFFF均不承担侵权行为的连带责任。如发现本站文章存在版权问题,请联系:1280199022@qq.com
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