Salesforce’s 30% rally, BTC's bullish outlook, TikTok eyed by Walmart-Microsoft

We review some of the top headlines from the US markets this week.

  • Salesforce closes at new peak after Dow Jones debut and record quarterly earnings
  • Bitcoin price closed 4% higher; analysts see 'very little resistance' to US$20,000
  • TikTok US sale heats up: Walmart partners up with Microsoft to join the bid

Salesforce’s Dow Jones launch greeted with 35% stock spike

US software company Salesforce.com saw its share price burgeon over 30% this week, driven by two huge announcements.

First, it was revealed on Monday 24 August 2020 that the company wold be included on the Dow Jones Industrial Average starting the following Monday 31 August, making it the first cloud-based digital platform to join the index.

Four days later, the company smashed Wall Street estimates in its latest earnings as it reported a quarterly revenue of US$5 billion for the first time.

The company then raised its sales revenue outlook for the year in the earnings report by at least 3.5% to a range of US$20.7 billion to US$20.8 billion, up from US$20 billion previously.

This combination of positive developments allowed the stock to close at US$271.10 on Friday – a new all-time high.

Looking ahead, Jefferies equities analyst Brent Thill has raised his share price target on Salesforce to US$285 while maintaining a ‘buy’ rating, citing that the company ‘can deliver more margin improvement given its scale’.

Meanwhile, Morgan Stanley gave an average price estimate of US$275, with a high target of US$335 in a blue-sky scenario.

BTC’s outlook is looking ‘very bullish’

Bitcoin (USD) is on the up and up again, with analysts positing that the cryptocurrency could be headed for more rallies in the near-term.

According to IG market analyst Monte Safieddine, the US Federal Reserve’s decision to keep inflation at 2% ‘for some time’ is expected to ‘infuse more volatility into the greenback' while providing a boost to riskier assets, including cryptocurrencies.

Given the nature of crypto exchanges, conformist strategies on any significant change in US monetary policy may lead to breakouts that could hint at the printing presses staying on for even longer,’ said Safieddine.

That prediction turned out to be true, with BTC rallying 3.7% a day later on Friday 28 August 2020. Signals remain bullish as at press time.

From a technical perspective, Safieddine wrote that ‘Bitcoin's technicals in the mid-term are looking far more bullish, with short-term pullbacks testing key levels’.

Traders who continue to HODL (Hold On For Dear Life) with an extreme buy bias at 90% - and even higher for the other crypto majors – are also creating upward pressure on BTC’s mid-term price.

Meanwhile, Cathy Wood, CEO of Ark Invest, also noted earlier this week that there is ‘very little resistance’ between the US$13,000 price level (once this figure is breached) and BTC’s all-time high of US$20,000.

‘We could stay in a new trading range, just at a little bit of a higher level than the recent six to 10. Maybe we’re in the US$10,000 to US$13,000 range. Nonetheless, a breakout,’ she said in a recent podcast interview.

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TikTok US sale: Walmart joins forces with Microsoft

US retailer Walmart on Thursday said that it would be partnering with Microsoft to bid for Chinese social media app TikTok’s US assets.

Walmart stated in a statement that TikTok’s integrated e-commerce and advertising capabilities outside of the US is ‘a clear benefit to creators and users in those markets’.

‘We believe a potential relationship with TikTok U.S. in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses,’ the hypermart chain added.

Following the announcement, Walmart shares rallied to a historic peak price of US$138.92 a share on Thursday 27 August 2020.

Meanwhile, Microsoft closed the session 2.5% higher at US$226.58 apiece.

TikTok is owned by ByteDance, a Beijing-based internet technology company founded in 2012. In recent months, ByteDance has come under heavy scrutiny by the US government over data privacy and security concerns.

At the beginning of August, US President Donald Trump then ordered ByteDance to sell off its US operations, setting the deadline at 12 November 2020.

Many are now wondering how ByteDance’s sale of TikTok in the US will impact the company’s planned initial public offering (IPO).

Although TikTok currently contributes a minor amount of revenue to ByteDance’s overall top line, much of ByteDance’s market value is said to be based on TikTok’s growth potential. This has undoubtedly cast a shadow of doubt over the upcoming IPO.

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