Microsoft Stock Gaps Higher on Move to Purchase TikTok

Meanwhile, President Trump announced his wishes to ban the video-sharing app

Jake Scott
Aug 3, 2020 at 10:39 AM
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The shares of Microsoft Corporation (NASDAQ:MSFT) are up 4.4% at $214.04, after the company said it was in talks to purchase the video-sharing app TikTok, from Chinese owner ByteDance. Microsoft hopes to conclude the deal by Sept. 15, eliminating the possibility of it being banned in the U.S. following stark claims to do so by President Donald Trump. 

Taking a look at charts, Microsoft stock has had a busy few months since bottoming out to s low of $132.52 during the broader market's mid-March pullback. In fact, MSFT hit a new all-time high of $216.38 on July 9, but had pulled back to trade between $200 and $205, ahead of today's jump. The equity is still well above its 40-day moving average, and boasts a solid 30% year-to-date lead.

It's no surprise then that analysts are extremely optimistic on the Big Tech giant. Of the 23 in coverage, 20 call it a "strong buy," while one says "buy." Meanwhile, just two sport a "hold" recommendation. Plus, the 12-month consensus price target of $226.93 is a 7.9% premium, and marks levels not yet obtained by MSFT. 

Today though, the appetite is definitely leaning toward calls. In just the first hour of trading, over 293,000 calls have changed hands -- six times the average intraday amount and more than double the number of puts traded. Most popular is the weekly 8/7 215-strike call, followed closely by the 230-strike call from the same series. New positions are being opened at both.

 


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