Oracle (ORCL) TikTok Deal Stalled in 2021: What This Means for Investors

Oracle Corporation (ORCL) continues to face setbacks with its highly publicized plan to acquire TikTok's U.S. operations, as legal and political challenges are expected to extend beyond the Trump administration into 2021. Meanwhile, the U.S. Commerce Department has paused enforcement of the shutdown order against TikTok's American operations, awaiting a federal appeals court decision. Additionally, China retains decisive authority over the asset sale, making it unlikely that TikTok’s proprietary code will be transferred to the U.S. government.

Key Highlights

• Oracle’s stock price failed to break out in October amid TikTok deal complications.
• Oracle is scheduled to release its fiscal Q2 2021 earnings on December 10.
• Upcoming legal rulings and TikTok developments could significantly influence market sentiment.

After the Trump administration appealed a preliminary injunction preventing TikTok’s shutdown, oral arguments are slated for December 14. The government also extended ByteDance’s deadline to divest TikTok’s U.S. assets to December 11, potentially setting the stage for pivotal developments before year-end. Despite this, media coverage and market attention have waned since September, making Oracle’s stock reaction to new updates uncertain.

Oracle’s shares surged to record highs when the TikTok acquisition was announced in September but faltered in October due to ongoing legal hurdles. Currently, the stock is trading sideways near resistance levels as investors await a catalyst. However, the necessity of Chinese government approval may constrain upward momentum even if the deal is finalized.

Upcoming Earnings Report

Oracle’s fiscal Q2 2021 earnings report, due December 10, is highly anticipated. Analysts forecast earnings per share (EPS) of $1.00 on revenues of approximately $9.79 billion, representing an 11% increase in profit compared to the same quarter in 2019. The stock remained steady after Oracle exceeded Q1 2021 earnings expectations and reached an all-time high of $62.60 shortly thereafter.

Wall Street maintains a cautious stance toward Oracle’s outlook, assigning a "Moderate Buy" rating based on nine "Buy" and twelve "Hold" recommendations. No analysts currently advise selling. Price targets vary from $50 to $70, with the stock trading roughly $4 below the median target of $63 ahead of Friday’s session.

Investor Insight

EPS, or earnings per share, is calculated by dividing a company’s net profit by its outstanding common shares. It serves as a key metric to assess profitability, often adjusted for extraordinary items and share dilution. Higher EPS values typically indicate stronger profitability.

Oracle’s Long-Term Stock Performance (2000–2020)

Oracle’s stock experienced a notable 15-year journey, peaking during the 2000 tech bubble and undergoing a corrective phase culminating in a breakout in 2017. After reaching new highs in 2019, the price tested its 50-month exponential moving average multiple times. Post-pandemic recovery in early 2020 pushed the stock back toward resistance levels amid TikTok acquisition talks.

Since March 2009, Oracle’s price action has been confined within a large ascending channel. The stock reversed at channel resistance in 2019 and currently trades just below this barrier, limiting upside potential if the TikTok deal closes. Moreover, technical indicators like the monthly stochastic oscillator signal a bearish trend, suggesting relative weakness may persist into early 2021.

Technical Tip

A trading channel is formed by parallel trendlines connecting a security’s support and resistance levels, within which the price fluctuates. Also known as a price channel, it helps traders identify potential breakout or reversal points.

Conclusion

Oracle’s stock remains range-bound near resistance as legal and geopolitical uncertainties delay the TikTok asset acquisition. Investors should monitor upcoming earnings and court rulings for potential market-moving events.

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

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