Shares in software giant Oracle (ORCL) accelerated today after it was confirmed by the White House that it is part of a consortium of investors that will control TikTok’s U.S. operations, including the all-important algorithm.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
White House Confirmation
A senior White House official confirmed the details of the TikTok deal including that it will move TikTok US operations into a new joint venture based in the U.S., with American investors in control with a majority of the ownership stake and of the board.
Oracle and venture private equity firm Silver Lake are set to lead the new venture with China-based ByteDance holding less than 20% of the equity in the final venture.
The deal also includes a plan to “copy” the TikTok recommendation algorithm and then move it under U.S. control where it will be “retrained” under the control of the joint venture.
Oracle, as the venture’s new security provider, will be in charge of this operation. The algorithm will then be regularly inspected by U.S. government officials.
“We feel this meets every security requirement that we need for the algorithm to make sure it’s behaving appropriately,” said the White House.
No Golden Share
The US government has no plans to take equity of a “golden share” or a board seat, but might charge a fee for facilitating the deal. President Trump is now set to sign an executive order later this week to declare that the terms of this deal meet America’s national security needs.
Security has been at the heart of the TikTok deal. Former President Joe Biden signed legislation before leaving office requiring ByteDance, the Chinese company behind TikTok, to sell its assets to an American company or face a ban.
Trump has extended the deadline several times since he returned to the Oval Office but it seems that now a solution has been found.
For Oracle, given the number of young users who use and watch the TikTok platform, it will be a further boost to its share price – see above – alongside other AI moves such as the Stargate venture with Open AI.
Is ORCL a Good Stock to Buy Now?
On TipRanks, ORCL has a Strong Buy consensus based on 24 Buy and 8 Hold ratings. Its highest price target is $410. ORCL stock’s consensus price target is $340.75, implying a 5.49% upside.
