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TikTok's Deadline Drama: Can Investors Bet on a Deal?

Theodore QuinnSunday, May 4, 2025 10:45 am ET

61min read

The U.S. government’s ongoing negotiations with TikTok over its ownership structure have reached a critical juncture. With President Trump signaling a potential further extension of the June 19 deadline for TikTok to divest its Chinese ownership, investors are left grappling with uncertainty. The stakes are high: a missed deal could trigger a ban, while a last-minute agreement might unlock new opportunities. Here’s what investors need to know.

Legal Limbo and Political Maneuvers

The clock is ticking for TikTok’s parent company, ByteDance, to meet U.S. demands to sell a majority stake to non-Chinese buyers. The Protecting Americans from Foreign Adversary Controlled Applications Act (PAFACA), upheld by the Supreme Court in January 2025, requires compliance by June 19—or face a shutdown. However, Trump’s track record of granting extensions suggests he may again delay enforcement to leverage the deal in broader U.S.-China negotiations.

Oracle, a key player in the potential acquisition, has seen its stock rise 22% since 2020 amid its role in TikTok talks. This reflects investor optimism that a TikTok deal could boost its cloud and data security businesses. However, Oracle’s valuation hinges on resolving lingering concerns over TikTok’s algorithm control and data security—issues that remain unresolved.

Buyer Beware: The Bidding Landscape

Over a dozen entities, including Amazon (AMZN), BlackRock (BLK), and crypto firms like Hbar (HBAR), have expressed interest in acquiring stakes. Yet, Oracle remains the frontrunner due to its close ties to Trump and technical expertise. A deal structured around leasing TikTok’s algorithm—a compromise to avoid outright sale—has drawn criticism from lawmakers who demand full operational control.

The tariff war between the U.S. and China complicates matters. Trump’s 34% tariff on Chinese goods, which Beijing retaliated against, has stalled progress. ByteDance refuses to sell its core algorithm, a non-negotiable for U.S. regulators. This impasse leaves investors weighing the likelihood of a “split-the-baby” solution: a partial sale with ongoing U.S.-China tensions.

Operational Risks and User Behavior

TikTok’s January 2025 shutdown briefly drove 10 million users to rival app RedNote, which surged to the top of Apple’s App Store. While TikTok resumed operations after Trump’s extension, its long-term viability remains uncertain. State-level bans, such as Florida’s prohibition on government devices, have already eroded its institutional reach.

Tech stocks, including TikTok’s potential acquirers, have underperformed the broader market by 8% since January 2024. This reflects broader investor caution toward regulatory risks in tech, with TikTok’s case amplifying concerns about geopolitical volatility.

Investment Implications

Oracle (ORCL): A deal could boost Oracle’s cloud and cybersecurity divisions but carries execution risk. Investors should watch for signs of progress by mid-June.
ByteDance: While not publicly traded, its valuation could crater if a ban occurs, hitting investors in Chinese tech funds.
TikTok’s Competitors: Apps like RedNote or platforms like Perplexity AI (PERX) may gain traction if TikTok is banned, though their scalability is unproven.

Conclusion

The odds favor another Trump extension, buying time for a deal—but investors should prepare for volatility. A June 19 agreement would likely stabilize Oracle’s stock and buoy tech sentiment, while a ban could trigger a tech-sector sell-off. Key data points to watch:

Timeline: A deal announcement before June 19 would signal investor relief.
Tariff Talks: A reduction in U.S.-China tariffs could unlock the impasse.
Algorithm Control: Details on data governance will determine whether Oracle’s stock holds gains.

With TikTok’s user base exceeding 1.5 billion globally and U.S. ad revenue hitting $5 billion annually, the stakes are enormous. Investors must balance geopolitical risk with TikTok’s cultural dominance—a bet on either side could yield outsized rewards—or losses. The clock is ticking, but the final deal remains anyone’s guess.

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