CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Microsoft-TikTok deal: how will it move share price and grey market?

Microsoft added $77 billion to its market cap after announcing its plan to acquire social media platform TikTok in the US. But how could the deal hurt the tech company?

Microsoft shares soared this week after it confirmed its plan to acquire TikTok, with the stock up 32% year-to-date.

But some analysts fear that the deal is lacking clear synergies and is simply too risky considering US authorities security concerns about TikTok’s Chinese parent company ByteDance.

On the plus side, the TikTok deal will help Microsoft access a wider advertising market, however, the consumer market remains ‘fickle’, according to Kirk Materne, senior managing director at US-based investment bank Evercore, and the company must make sure that the acquisition ‘does not overshadow the Commercial Cloud narrative that has powered Microsoft shares higher over the past five years’.

‘The prize might be bigger, but so is the risk,’ Materne added.

Evercore gave Microsoft a ‘outperform’ rating and a target price of $225 per share.

Microsoft closed at $213.29 per share on Tuesday.

TikTok deal could strengthen Xbox offering

Senior research analyst at Bernstein, Mark Moerdler, also admitted he had concerns about some aspects of the TikTok deal, which will see it acquire a portion of the social media platform, namely its operations in the US, Canada, Australia and New Zealand.

However, he believes that the deal could help bolster Microsoft’s consumer business, particularly with the hotly anticipated launch of its new Xbox Series X console.

‘Microsoft has been working aggressively to become a leader in game streaming and it is quite possible that Microsoft could be looking to leverage TikTok’s consumer relationships, video and IP in Microsoft game streaming business,' Moerdler said in a note to investors.

‘Microsoft could also use assets from their existing investments to improve / expand the reach of TikTok,’ he added.

Bernstein recently reiterated its ‘outperform’ rating for Microsoft and issued a $233 target price for the stock, implying a potential upside of 9%.

How to trade stocks with IG

Looking to trade the Microsoft and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘Microsoft’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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