Anything you can do I can do better. Is that what Apple (AAPL) is trying to tell Microsoft? Rumors have been making the rounds that Apple would also like to get in on the TikTok action. A recent report by Axios intimated the tech giant might be interested in acquiring the Chinese video-sharing social network.
Microsoft (MSFT) is currently in talks with parent company ByteDance to purchase TikTok’s US operations. Apple, however, has said there are no ongoing talks and it has no interest in a deal.
Deutsche Bank analyst Jeriel Ong has also joined the discussion. Calling the deal unlikely, the analyst lists several reasons why the idea is fanciful.
For starters, Ong notes, assuming TikTok has a $30 billion enterprise value, a deal would be 10 times bigger than any other in Apple’s history.
Additionally, Apple has historically taken a negative stance toward targeted advertising - a key ingredient of TikTok’s modus operandi. So, a U-turn on the issue would reveal a lack of backbone, unless Apple makes changes to how TikTok collates users’ data.
Lastly, TikTok would represent a foray far beyond the boundaries of the usually insular Apple ecosystem.
“While Apple has dabbled in the past with experiences outside of AAPL (for example, one can be an Apple Music user on Android phones, technically), the vast majority of TikTok users do not use Apple devices. There could be questions to what extent TikTok makes sense within AAPL and how TikTok furthers AAPL's present business. Overall, we reiterate our doubt that this a serious consideration for AAPL and believe that many investors would prefer they continue to use cash to repurchase shares as they have in the past few years (~$20b/quarter)," the analyst added.
There’s no change to Ong’s rating on AAPL which remains a Buy. The analyst’s price target stays at $440, indicating minimal movement from current levels. (To watch Ong’s track record, click here)
Overall, AAPL's Moderate Buy consensus rating is backed by 23 Buys, 6 Holds and 2 Sells. Analysts are expecting shares to decline 4% over the coming months, as implied by the $427.29 average price target. (See Apple stock-price forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.