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Mayer's Departure From TikTok 'A Huge Blow': Wedbush Analyst

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Mayer's Departure From TikTok 'A Huge Blow': Wedbush Analyst

TikTok CEO Kevin Mayer resigned as the head of the short-form video app on Wednesday, and a Wedbush analyst said it's a major setback for the beleaguered short-form video app as a standalone entity. 

TikTok’s U.S. general manager Vanessa Pappas will replace Mayer on an interim basis.

Wedbush On TikTok CEO's Exit: Mayer quit the company just months after joining on June 1, analyst Daniel Ives said in a Thursday note.

Microsoft Corporation (NASDAQ: MSFT) buying TikTok would be like Christmas morning coming early for investors, especially at a valuation in the $35 billion to $40 billion range, or lower depending on negotiations, the analyst said.

If navigated the right way, he said TikTok could reach a $200-billion valuation within a few years. 

Wedbush said it has an Outperform rating on TikTok. 

Mayer leaving at this juncture is additional evidence that TikTok and ByteDance know a sale of U.S. operations is a matter of when and not if, despite TikTok's court challenge, Ives said. 

"We believe Mayer leaving is a huge blow to any prospects that TikTok had to trying to fight this battle and stay a standalone and is another indicator that TikTok's US Operations being sold eventually to Microsoft is likely on a path to being completed sooner rather than later given the Trump executive order."

Trump's TikTok Order: Trump signed an executive order earlier this month that would effectively stifle TikTok's operations in the U.S. unless parent company ByteDance makes a sale within 45 days of signing the order.

The president accused the company of siphoning off “vast swaths of information” from its users, and doing the biddings of the Chinese Communist Party.

Oracle Interested In TikTok: With the 90-day deadline looming from the Trump administration for ByteDance to divest TikTok's U.S. operations, it appears a handful of potential bidders besides Microsoft have entered the fray including Oracle (NYSE: ORCL), Ives said. 

While Oracle is very interested in TikTok, the analyst said he continues to strongly believe it's Microsoft's deal to close at this point.

 

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