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 and what does it mean for the TikTok grey market?

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 will Microsoft deal impact IG grey market for TikTok?

The IG grey market has seen a significant drop in the expected valuation, down to $91/$101 billion, compared to $220/230 billion at the end of June, according to Chris Beauchamp, chief market analyst at IG.

‘It has become possible that the firm will only list in China and not seek a listing in New York or Hong Kong, and with US-China tensions becoming worse the firm may find itself caught in the middle between the two nations,’ Beauchamp said.

‘Allowing Microsoft to buy TikTok would also remove one of the firm's successful divisions, further reducing its attractiveness,’ he added.

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

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.