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Why Shares of Walmart and Microsoft Are Rising Today

By Rich Duprey - Aug 27, 2020 at 3:46PM

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The two make for an unusual partnership in resolving a sticky national problem.

What happened

Shares of Walmart (WMT 1.85%) were rising 5% in afternoon trading Thursday after it was reported the retail giant was partnering with Microsoft (MSFT 1.70%) to bid on TikTok, the popular Chinese video sharing site that has run afoul of U.S. national security concerns.

So what

President Trump has forbidden American companies from doing business with its parent ByteDance because of the massive amounts of data it quietly collects on its users, which is feared could be used for blackmail, tracking government employees, or corporate espionage.

Woman waving to smartphone

Image source: Getty Images.

Trump has given ByteDance an ultimatum to sell TikTok, and numerous companies have expressed interest in acquiring it. While Walmart was one of them, partnering with Microsoft improves its chances.

Now what

CNBC says a buyer could be announced within a week, with a price valuing the platform between $20 billion and $30 billion. Others have pegged its value at as much as $50 billion. Yesterday, TikTok's president Kevin Mayer resigned from the company, suggesting a deal was close. 

According to Bloomberg, Walmart confirms it is jointly pursuing the app with Microsoft, saying the joint bid would "meet both the expectations of U.S. TikTok users while satisfying the concerns of U.S. government regulators."

Tech giant Oracle (ORCL 2.58%) has also submitted a bid, and while some in the Trump administration favor it over Microsoft, the addition of Walmart could sway opinion the other way. Microsoft's shares were up 3% in late trading.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
$132.22 (1.85%) $2.40
Oracle Corporation Stock Quote
Oracle Corporation
$79.15 (2.58%) $1.99
Microsoft Corporation Stock Quote
Microsoft Corporation
$291.91 (1.70%) $4.89

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