Amazon (AMZN) unexpectedly threw its hat into the ring at the moment to amass standard video-sharing app TikTok. In contrast to different main tech shares that wobbled on Wednesday forward of Trump’s tariff announcement, Amazon’s inventory closed the day 2 p.c larger on the information.
Amazon has approached U.S. Vice President JD Vance and Commerce Secretary Howard Lutnick about its supply, The New York Occasions first reported. How a lot Amazon is prepared to pay to amass TikTok wasn’t disclosed and sources point out that officers aren’t taking the bid significantly.
The information comes simply days earlier than the April 5 deadline for TikTok, utilized by 170 million People, to separate from its Chinese language proprietor, ByteDance, or else face a shutdown in the US. Whereas President Donald Trump has steered he could lengthen the deadline, negotiations are nonetheless intensifying.
If Amazon succeeds, the deal might speed up the corporate’s push into social commerce, an space the place a earlier try was not too long ago canceled.
For traders, the larger query is whether or not Amazon’s sudden curiosity in TikTok is a long-term strategic transfer for the corporate.
What’s driving Amazon’s curiosity in TikTok?
TikTok has grow to be an e-commerce powerhouse, with influencers driving billions in gross sales by affiliate hyperlinks — lots of which path to Amazon.
TikTok’s short-form movies have confirmed to be an extremely efficient advertising device. Amazon launched a TikTok-style procuring function known as Encourage in late 2022, nevertheless it failed to achieve traction. Amazon quietly scrapped the function in February.
Shopping for TikTok would give Amazon instantaneous entry to the social commerce market. It could additionally put Amazon on the identical taking part in subject as different mega tech firms like Meta (META), proprietor of Fb and Instagram, and Microsoft (MSFT), proprietor of LinkedIn.
Who else needs TikTok?
Amazon’s shock bid comes amid a flurry of exercise from different consumers, together with Oracle, Andreessen Horowitz, Blackstone and even a consortium backed by social media influencers like MrBeast.
Some seem to have a greater shot than others.
For instance, Oracle, which already hosts TikTok’s U.S. information, is main a bid backed by enterprise capital big Andreessen Horowitz. Oracle’s chairman, Larry Ellison, has shut ties to Trump, which might give this bid an edge.
With such a crowded subject, Amazon’s bid seems to be a protracted shot — particularly given its lack of prior involvement in negotiations.
The extra doubtless end result could also be {that a} new, impartial world TikTok firm is shaped and ByteDance shares held by U.S. traders are transferred there, based on experiences.
Trump’s function and the tariff issue
Trump, who initially pushed for a TikTok ban in 2020, has softened his stance in current months, recognizing the app’s affect over younger voters.
Trump has insisted a deal will likely be finalized earlier than the April 5 deadline, however a much bigger story dominated the markets Wednesday — a brand new baseline 10 p.c tariff on all imports and better tariffs on imports from China, Japan, Taiwan, South Korea and the European Union.
For Amazon traders, Trump’s tariff plans might have a big influence on the corporate’s earnings and income. Any shift in U.S.-China commerce coverage might disrupt Amazon’s provide chain.
Experiences counsel Trump could use tariffs as leverage, probably providing to ease commerce restrictions in trade for Beijing’s approval of a TikTok sale. Nevertheless, any deal would require Chinese language authorities approval first.
What this implies for traders
On Wednesday, Amazon’s bid for TikTok helped nudge the inventory 2 p.c larger by the shut, at the same time as different main tech shares like Apple (AAPL) and Meta dipped. Amazon is down greater than 10 p.c yr up to now.
For long-term traders, there’s numerous uncertainty within the air, particularly amid broader market turmoil.
If Amazon had been to amass TikTok, it might remodel the e-commerce panorama. Nevertheless, if negotiations collapse and a TikTok ban is enforced, it might ship shockwaves all through the tech sector.
Regardless, Amazon’s willingness to make such a dramatic transfer suggests it sees social commerce as a significant progress space.
With simply days left earlier than the deadline, the TikTok saga remains to be unfolding. Traders ought to brace for volatility because the market costs within the influence of Trump’s tariff choice and the aftermath of a possible TikTok sale over the weekend.
Editorial Disclaimer: All traders are suggested to conduct their very own impartial analysis into funding methods earlier than investing choice. As well as, traders are suggested that previous funding product efficiency isn’t any assure of future worth appreciation.
