Oracle (ORCL) Shares Drop to $57 in 2023 Following TikTok Download Ban

Oracle Corporation (ORCL) experienced a decline in pre-market trading on Friday, reacting to the U.S. Commerce Department's announcement banning TikTok and WeChat downloads starting Sunday. The directive also compels major app distributors like Apple Inc. (AAPL) and Alphabet Inc. (GOOGL) to remove these apps from their platforms. The move's implications on Oracle's ongoing efforts for American ownership of TikTok remain uncertain, sparking market caution.

Key Highlights

• The U.S. Commerce Department enforces a ban on TikTok and WeChat app downloads.
• Oracle's pursuit of American ownership faces uncertainty amid regulatory actions.
• Maintaining the $57 to $57.50 price range is crucial for Oracle to sustain a bullish outlook.
• Long-term forecasts suggest limited gains even if a deal concludes successfully.

Following the announcement, Oracle shares dropped approximately 3%, nearing weekly lows as investor hesitation grows. Despite holding Monday's breakout levels in the lower $60s, upcoming statements from President Donald Trump and Commerce Secretary Wilbur Ross may influence market direction, with potential delays in enforcement until after the November election.

Historically, Oracle peaked at $60.50 in July 2019, plummeted into the $30 range in March 2020, and rebounded slightly after TikTok acquisition talks surfaced. The stock has hovered near resistance levels recently, awaiting positive developments to confirm a breakout. A permanent ban could trigger a sell-off, reinforcing a bearish double top pattern signaling further downside risk.

Oracle reported better-than-expected Q1 2021 earnings with modest 2% revenue growth year-over-year, primarily driven by cloud applications. However, the TikTok deal was anticipated to accelerate growth. Compared to Dow component Microsoft Corporation (MSFT), which posted over 12% revenue growth, Oracle remains more vulnerable to deal uncertainties.

Technical Insight

The double top pattern observed is a strong bearish reversal indicator, formed when an asset hits a high price twice with a moderate decline between peaks. Confirmation occurs if the price falls below the support level established between the two highs, suggesting potential further declines.

Oracle Long-Term Performance (2000–2020)

Oracle's stock saw a parabolic rise in 1999, peaking at $46.47 in Q3 2000 before a bear market drop to $7.25 in 2002. Subsequent recoveries led to resistance tests in 2015 and a breakout attempt in 2017, stalling just above $60 by 2019. The stock repeatedly tested support levels around the 50-month exponential moving average (EMA) over the past decade, reflecting persistent volatility and investor caution.

Recent price action suggests limited upward momentum, with rallies stalling just below channel resistance. Negative short-term news could fill the recent gap between $57.50 and $59.50, challenging the breakout above the July high of $57.29. Maintaining support above this floor is critical to prevent further technical deterioration.

Technical Tip

Price channels form when a security's price moves between two parallel trendlines, which can be horizontal, ascending, or descending. Traders use these channels to analyze momentum and predict price movements within defined boundaries.

Summary

Oracle shares have declined following the U.S. Commerce Department's ban on TikTok and WeChat downloads, introducing uncertainty around the company's strategic plans and impacting investor sentiment.

Disclosure: The author held no positions in Oracle or related securities at the time of writing.

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