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Oracle Partners With TikTok : ETFs to Gain

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ByteDance, TikTok’s Chinese owner, has selected Oracle (ORCL - Free Report) to be its technology partner in the United States. Notably, Oracle is expected to assume management of TikTok’s U.S. user data, per a Reuters article. Moreover, the software giant is negotiating to acquire a stake in TikTok’s U.S. operations, according to the same article. Buoyed by this development, Oracle’s stock gained around 7% in pre-market trading on Sep 14.

Meanwhile, whether the deal will be cleared by President Donald Trump is difficult to say as he wanted a U.S. technology firm to own most of TikTok in the country, going by a Reuters article. Notably, the Committee on Foreign Investment in the United States is reviewing the ByteDance-Oracle partnership talks, according to the same article.

Going on, in this bidding war for TikTok, Oracle allegedly beat large retailer like Walmart (WMT), which teamed up with the world's largest software maker Microsoft (MSFT) in an effort to buy the U.S. operations of TikTok.

Notably, ByteDance has been considering the sale of TikTok’s U.S. assets ever since it came under the government’s microscope. Well, the company’s vast private database on its U.S. consumers is considered a potential threat. Therefore, regulatory authorities have been escalating pressure on TikTok to sell its U.S. wing. In this regard, the White House had previously set a deadline of Sep 20 for ByteDance to inform about a plan to divest TikTok’s U.S. operations to a U.S. corporation or face a ban in the United States by Sep 29, per a CNBC article. Moreover, any such deal needs to be closed by Nov 12, as a CNBC article reports.

It is worth noting here that TikTok has witnessed exponential growth since it was launched in the United States during 2018, buoyed by teenagers’ love for its short comedic videos and novel dance clips. The app boasts an estimated 100 million users in the nation alone. Moreover, going by the data analytics firm Sensor Tower report, TikTok stood out as the most downloaded non-gaming app globally for August 2020 with more than 63.3 million installations, up 1.6% year over year.

ETFs to Gain

The software bigwig Oracle recently reported better-than-expected first-quarter fiscal 2021 results as both its earnings and revenues beat the respective Zacks Consensus Estimate.

Earnings per share came in at 93 cents, topping the Zacks Consensus Estimate of 86 cents and also improving 15% from the year-ago quarter’s level. Revenues rose 1.6% year over year to $9.19 billion and exceeded the consensus mark of $9.15 billion as well. A recovery in client spending led to the robust quarterly performance as remote working spurred demand for cloud services as well as traditional licensing business (see: all the Technology ETFs here).

ETFs with the highest allocation to this software giant are likely to be big movers on Oracle’s latest development. Below we highlighted those:

iShares Expanded Tech-Software Sector ETF (IGV - Free Report) )

This ETF provides exposure to software companies in the technology and communication services sectors by tracking the S&P North American Expanded Technology Software Index. The fund holds a basket of 100 securities with Oracle taking the fourth spot at 7.7% of total assets. It is popular with AUM of $4.87 billion. The product charges 46 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: Beaten-Down ETFs to Buy After Market Rout).

Invesco BuyBack Achievers ETF (PKW - Free Report) )

This ETF follows the NASDAQ US BuyBack Achievers Index, which comprises U.S. securities issued by corporations that effected a net reduction in shares outstanding of 5% or more in the trailing 12 months. It holds a basket of 243 stocks with Oracle taking the fourth position at 4.88% allocation. PKW accumulated $667.4 million in its asset base. It charges 62 bps in annual fees.

First Trust Cloud Computing ETF (SKYY - Free Report) )

This fund provides exposure to cloud-computing securities by tracking the ISE Cloud Computing Index. Holding about 65 stocks in the basket, Oracle takes the fourth spot at 3.91% of the assets. The product has been able to manage $4.77 billion in its asset base. It has an expense ratio of 0.60% and a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Nasdaq in Correction: One Solid Reason to Buy the Dip in ETFs).

First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) )

This fund provides exposure to the dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. The product amassed $1.25 billion in its asset base. The ETF charges 50 bps in annual fees and holds about 89 securities in its basket. Of these firms, ORCL occupies the eleventh position, making up 3.81% of the assets (read: 5 Cheap Dividend ETFs for Safe and Consistent Income).

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