Cooperation of Walmart and Microsoft adds volatility to the market

Cooperation of Walmart and Microsoft adds volatility to the market

2020-08-28 • Atualizado

TikTok, the famous video app, attracts not only new users but also big companies willing to buy it. After the US President Donald Trump blamed the Chinese internet company Bytedance, the owner of TikTok, for being a threat to the national security of the United States, several famous companies showed interest in buying the US operations of TikTok. Yesterday, there was another huge announcement on that matter from one of the US largest retailers - Walmart. Let’s find out the details of that offer and look at the performance of the stocks.

An attractive piece

Back to the beginning of August, Microsoft revealed the details of what could be one of the biggest deals of this season. After consulting with the US President Donald Trump, the software producer was approved for discussions with TikTok’s parent Bytedance. Microsoft pledged to make a security review of TikTok’s operations in the US and provide benefits to the country. According to Microsoft’s officials, the discussions are expected to be completed no later than September 15 – in about two weeks. As a result, the stock of Microsoft has stuck above 210 since the beginning of August. While everyone thought that no surprises were possible, Oracle announced that it joined the bidding for TikTok. However, the sudden appearance of a new challenger did not disturb the ambitious plans of Microsoft. On Thursday, it became known that the company teamed up with Walmart to acquire the US-based TikTok’s business. While this alliance may look strange from a first glance, it gives equal benefits to both Walmart and Microsoft.

Walmart is competing with Amazon and planning to launch a membership program as an alternative to Amazon Prime. This deal may help Walmart to gain positions against Amazon, as it will get access to new channels for reaching new customers.  As for Microsoft, this cooperation will add more benefits to its cloud business.

 Technical picture

After surging to the new all-time high at $139.33 yesterday, Walmart stock has gapped up even higher on Friday reaching $141. For now, the price of the stock is correcting down. The first support lies at 130, this level is also confirmed by the ascending trendline. Bulls will appreciate the retest of $141. The breakout of it may push the stock to the new highs around the $145 level.

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Microsoft’s stock continues its stable gains. The asset has been trading near the $231 level since the start of the US trading session. If a breakout happens, further gains are inevitable. Let’s focus on the $235 level. On the downside, the support is placed at $208 (50-day SMA).

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