Walmart Joins Microsoft In A Bid To Buy TikTok
Shares of Walmart rose six percent this week and hit a new all-time high on Friday after the retail giant confirmed it is teaming up with Microsoft in a bid for Tiktok the wildly popular Chinese social media APP Tiktok his close to selling operations in the US Canada Australia and New Zealand in a deal expected to be in the range of twenty to thirty billion dollars. Andy, this is moving pretty quickly. So it's quite possible by the time people are listening to this. The deal is already done but. When I first saw this news. It didn't make any sense to me why Walmart would get involved here. Yeah I think that probably was a little bit of a shock to too many people but the thought about it kind of makes little sense. Chris. So just think about what Doug Macmillan. The CEO at Walmart has been doing in their e commerce business trying to have so much success even before the covid nineteen lockdowns and having that success partnering with for example, the likes to shop of five announced earlier on me well, more has a very large ecommerce presence when the larger sites out there they're ECOMMERCE businesses going gangbusters. Right now they generate a lot of profits and cash as Microsoft and so I think when Walmart is looking to expand their audience, maybe continue to compete with Amazon when it comes to third party sellers, they have four, hundred, fifty, thousand third party sellers, Walmart does that's a fraction of what Amazon does. So again, to expand its reach reach a different audience, take talk may not be so much of a stretch depending on what price they can get. Now there's there's big numbers being tossed out of thirty billion or so but that's I'd be surprised if tick tick talking get that but I see as a way for Walmart to really expand into different audience expanded advertising business and build out ECOMMERCE platform in a way that it hasn't it would be very tough to do on its own. Jason if you're a Microsoft shareholder, are you would you rather see Microsoft go all in on this or do you like the idea that a company like Walmart is helping to spread the risk around because they're going to pay for part of it? I mean mean I would rather see Microsoft just take this on its own I. Mean I think the bigger risk probably. is on Walmart side just given what the business does given given the history of the business kind of how it. Built itself up to this point and physical retail. So You know personally, I'd rather see one parties opposed to many but. We'll cross that bridge when we come to it it, it does seem like an odd combo. TIKTOK perspective I mean you you have to figure they tiktok or trying to figure out how to be more than just an ad play right? What we know about the business today, it's very little. We know they have a big network of people that use the platform. I mean, no, they don't make a heck of a lot of money and it's essentially just an advertising play and and that's a very tough space with plenty of incumbents that do really well already. But if you're not facebook or Alphabet, then you're just part of this sort of collective of mediocre businesses that are taking a little bit of what is a very. Big Hi there I mean twitter it's just kind of mediocre business snap. It's just kind of mediocre business in tick, Tock faces that same fate if they don't figure out how to become more than just an ad plays so so you've seen facebook with instagram trying to get into social commerce twitter's made some here and there with that with that as well as snap. Eligible that Walmart would view tiktok from that perspective and tiktok would be looking to do that. It's just going to be a very. Interesting situation if it is a consortium that ends up acquiring Tiktok, because you have more people trying to determine more companies trying to determine the fate, which typically can be a more difficult thing and a lot of speculation of Walmart might do with this but you gotta like the fact that Doug Macmillan is keeping his cards pretty close to the vest he's not. Really saying they're GONNA use it. He's not saying whether it's going to be part of the Walmart plus service that they're going to roll out later this year. Yeah. Not Surprising just the quality of management that Doug has been able to showcase in just the type of leader he is and will be very interesting on the pricing perspective how much they WANNA pay If the deal does go through there aren't very many platforms out there. I think they're reportedly eight, hundred, million users of TIKTOK. Imagine they're very active there they probably skew young. There aren't many platforms out there when you look at the acid base, this is one that that I think Walmart is one of the larger companies out there in the world is saying listen this is a place where we can maybe have some immediate impact in there and to to continue our our transformation too much more of a larger of a digital company.