Why This Analyst Says Microsoft's LinkedIn Purchase Bodes Well For TikTok

Social media companies could benefit from tailwinds in the next 12 months if Microsoft becomes TikTok’s U.S.-based suitor, according to Rosenblatt Securities.

The Analyst: Mark Zgutowicz maintained a Buy rating on Snapchat SNAP a Buy rating with a $30 price target; a Buy rating on Facebook FB with a $325 price target; a Buy rating on Spotify SPOT with a $325 price target; and a Buy rating on Twitter TWTR with a $33 price target. 

The Takeaways: President Donald Trump issued two executive orders Aug. 6 directed toward ByteDance and TencentHoldings, prohibiting any U.S. person or company from “transacting” with either of the Chinese-based parent companies or subsidiaries beginning Sept. 20.

In regards to Tencent, “we see de minimis implications to our coverage, but rather a big question mark facing Apple and whether WeChat iPhone downloads/updates via the App Store constitute prohibited 'transactions' with either company,” Zgutowicz said in a Monday note. 

On the other hand, Microsoft Corporation MSFT seems to have the upper hand in any situation related to a possible TikTok acquisition, the analyst said. 

“We suspect Microsoft’s bank account [fares] better at the negotiating table, as does its past/present ties with TT, and the apparent favor it has in the White House.”

Looking through the lens of Microsoft’s purchase of LinkedIn, TikTok could reach its monetization potential and user engagement goals with Microsoft as its suitor, he said. 

Price Action: Snap shares were trading 2.27% higher at $22.07 at last check Monday, while Facebook shares were down 1.89% at $263.38. Spotify shares were down 1.43% at $282.42. Twitter shares were up 1.18% at $37.58.