Investing.com -- Bank of America analysts noted that Oracle (NYSE:ORCL) has emerged as the leading candidate to acquire TikTok’s U.S. operations under Project Texas 2.0, according to press reports from The Information and Forbes.
The analysts cited ByteDance’s existing relationship with Oracle, which has been storing TikTok’s U.S. user data since 2022, as a key factor in this development.
The proposed acquisition has also gained support from Vice President JD Vance and National Security Adviser Michael Waltz, with Vance stating that a “high-level agreement” addressing national security concerns is likely to be finalized by the April 5 deadline.
Despite this progress, several deal hurdles are said to remain, including regulatory compliance in both the U.S. and China and negotiating access to TikTok’s valuable advertising and usage algorithms.
“Valuation [is] another key point, press reports have suggested that TikTok US could be generating $10-20bn in US ad revenues (Our US Online media company coverage group sector multiples generally range from 3-7x forward year revenues), but revenue sustainability could be in question without TikTok’s usage and advertising algorithms,” said Bof.
A potential Oracle-TikTok deal would likely resolve regulatory concerns and make the platform more attractive to advertisers, increasing competition for U.S. online media companies such as Meta (NASDAQ:META) and Snap.
However, BofA analysts believe that Oracle’s operations have limited digital media synergies with TikTok, making its role in the business uncertain beyond regulatory oversight.
BofA also maintains a Buy rating on Meta, emphasizing that Meta’s short-form video usage is growing faster than TikTok’s, according to Sensor Tower data for Instagram.
Additionally, they said Meta is expected to benefit from AI-driven incremental ad spending, which could help mitigate any competitive pressures stemming from a TikTok acquisition by Oracle or another U.S. buyer.