Is Microsoft a Stock To Buy Now with Tiktok deal coming?!
Application form to apply & try and get in my Private Stock Group/Financial Fortress
If you did not see essentially Microsoft is going to buy at least the US arm of Tiktok! Tiktok app is in a serious situation right now and Microsoft wants part of it. Great CEO Satya Nadella is working on the deal for Tiktok by Sept 15. In this video we will discuss if Microsoft stock is a stock to buy now or not! Would you put MSFT stock in the stocks to buy now category or stocks to watch? LMK! Enjoy!
Want to join our free STOCKHUB discord chat? Here is the link
This is where you can chat for free with other investors in the stock market about individual stocks or things going on in the market. Enjoy!
*My Instagram is : FinancialEducationJeremy
This is a Jeremy Lefebvre Production
Created by Jeremy Lefebvre
Well guys, not sure if you heard word on the street or not, but Microsoft has confirmed talks to buy Tiktok in us and they aim to finish a deal by September 15. There’s been a lot of confusion about this potential deal is Microsoft trying to buy the entire tic Tock company or just the US side has a lot of different rumors as far as that goes.
But regardless, there’s a potential deal in the works. Okay, Microsoft on Sunday confirmed that is held talks with Chinese technology company buying dance to acquire its trendy social app Tick Tock in the US.
Microsoft said in a statement that we’ll keep working with the US government on a deal that it intends to conclude talks by September 15, which is about what 42 days from now or so if it were to complete the deal, Microsoft could simultaneously resolve a recent controversy in Washington and gain power in consumer technology.
If you guys didn’t hear there’s a lot of talk about you know, tick tock being potentially banned in the United States of America is was obviously big news. And here we have Microsoft potentially buying maybe at least the US arm if not the entire tic Tock company out which by the way.
If you’re thinking, you know, Microsoft couldn’t buy the entire tic toc company they actually could actually easily afford the company will look at how much they would have to pay if they bought the entire operations or just us side and you know, in this video here today, okay.
There’s a lot of back and forth from folks wondering, you know, is this the US trying to force you know, basically a social media is hand because we know Twitter what US based right? Snapchat, US base Igy, Facebook, right, all US based and so it’s like this one social platform comes in that’s not us base is from China all sudden, it’s an issue.
So you know, there’s a lot of different talks, we’re not going to get into that. In this particular video. For today’s video, we got to look at Microsoft stock, and we’re going to assume that the deal for tic toc goes through Okay, that’s what we’re going to assume.
For this video, we’re going to assume this deal goes through and is Microsoft stock a stock to buy now? Or would you put this in like the stocks to watch category more, I will give you my personal opinion, if I think the stock is a buy, sell, or hold? Okay, and we’ll look at the valuations.
We’ll look at, you know, everything in relation this company is trying to do a nice in depth video for you guys here today. So I hope you enjoy this video. As always, if you don’t mind smashing that thumbs up button that definitely helps out the channel.
And it lets me know that you enjoy an in depth video looking at a particular stock here, like we are doing with Microsoft here today. And also just so you guys know, if you’re looking to scale your stock market portfolio, you have five figures plus in the stock market, or you’re planning to invest five figures plus, in the next 12 months.
Check out the first link in the description that will actually give you the ability to apply and hopefully get on a call with someone high up from my team and actually potentially talk with them about a product we have that could actually help scale your stock market portfolio.
So if you want check out that first link in the description, okay? Mr. Softee, Microsoft. So when we look at Microsoft’s revenue over the years, we notice a few things. One, it’s up trending, that is great news, okay. But they have three main business segments at Microsoft K. One is called productivity in business process.
The other is called intelligent cloud. And the other one is called more personal computing. Now we’ll look at those businesses more intensely in a moment and kind of you know, we’ll we’ll look at those in depth because when you just hear those general words, they’re like, what does that actually mean?
What does intelligent cloud what is more personal computing? Like what the heck is that, but just what I want to show you guys here is over the last, you know, four or five years, the company has been up up in a way as far as its revenue goes, Okay.
They just reported earnings here about two weeks ago now. Okay, earnings came in at $1.46. This year, versus $1.34 was expected a nice beat, their revenue came in at 38.0 3 billion versus 36. Point 5 billion was expected. So about a $1.5 billion beat.
On top line, Microsoft’s overall revenue grew 13% on an annualized basis in the quarter, which ended June 30. According to statement revenue went up 15% in the prior quarter, but obviously with Ronnie Rona situation, you know, it’s always it’s hit all businesses to a certain extent, at least in the short term. Okay. Now, when we start looking at these numbers more intensely.
I have a few different ones circled there. Okay, their main cloud business azura, which I hope I pronounced that right. Oh, I don’t know if I ever pronounce it. I always call it azura. Okay, that’s their main cloud business, very big cloud business. Microsoft has. It’s been a growth beast for years and years now.
Okay. And it’s still growing very nice. q4 fiscal 20. They grew 47% those are business okay, dynamic products and cloud services that had 13% growth. Obviously, some of these growth rates aren’t as impressive as they once were.
Because what growth usually goes down over time and also obviously this quarter, you know, was was during a Roni run a situation that obviously hurt business. Okay, office 365 commercial nice growth 19% there now search ads, excluding traffic acquisition cost, that was the one really negative number.
Okay, negative 18%. I think a lot of that, honestly. The end of the day has to do with Ronnie Ron and just a lot of ad rates being down across the board. Okay, server products and cloud services, that number was up 19% windows commercial products and cloud services was up 9%.
And look at x box business with his strongest growth has probably had forever, okay, 65% growth broken out there from Xbox content services, we know obviously, you know, with the ronnie run a situation ton of people at home, and we know anything that basically involved, you know, watching TV, or playing video games or anything like that the business has been very strong.
Let’s put it that way. Because there hasn’t been much due, especially when you know, all the kids went out of school, and then you had you know, mass amounts of people unemployed during the whole situation.
Okay, it is a company that’s not scared to acquire companies. they’ve acquired several big companies over over just the past few years. Okay, look at this one, Microsoft acquired GitHub for 7.5 billion. This was back two years ago.
Now, GitHub, I mean, just a massive deals that are 7.5 billion, Microsoft announced it and reached an agreement to acquire GitHub, the world’s leading software development platform, where more than 28 million developers learn, share and collaborate to create the future.
Together, the two companies will empower developers to achieve more at every stage of the development lifecycle, accelerate enterprise use of GitHub, and bring Microsoft’s developer tools and services to new audiences. Okay, back in 2016.
So four years ago, now, Microsoft acquired linked in a massive deal there. A lot of you guys, you know, especially if you’re, you know, professional out there in the business landscape, you probably have a LinkedIn profile, or you’ve thought about getting a LinkedIn profile.
And so when you think about this, it’s not just Microsoft in terms of their cloud business, their traditional windows business, right, the office 365 products and those sorts of things. And Xbox, it’s also you’re getting the LinkedIn business in the GitHub business as well, which are very large acquisitions.
In terms of the LinkedIn, we just saw the acquisition number, right. Or they paid over 26 billion for that back four years ago. We’re talking about massive deals there. Okay. And these deals have been orchestrated by this guy right here. Okay.
Sasha Nadella, who has completely turned around this company. Okay. I would rate him as one of the you know, I think of big tech or just, you know, let’s just talk about, you know, the NASDAQ 100. I think you got to put him in the top five honestly, best CEOs in the NASDAQ 100.
Like he’s done a phenomenal job with Microsoft getting this business back on the right track and all those sorts of things. Okay, when Satya Nadella first took over the reins as Microsoft CEO on February 4 2014, so about, you know, six and a half years ago or so, okay.
The company was losing steam fast. Microsoft Windows eight had been a disaster. Microsoft employees were constantly battling behind the scenes for supremacy. And all while consumers and developers alike were losing faith in Microsoft.
Okay. And basically, Steve Ballmer had loved this company from 2000 to 2014. Okay. And you know, Steve Ballmer, you know, ah, yeah, I feel like, you know, he just didn’t do the best job with this company.
I mean, first off, look at the stock price, during a 14 year error that Bulmer was there. I mean, it did nothing. Okay. Absolutely. Nothing. I mean, I think that technically, the stock was down from basically the time he took over the company to the time he, he, you know, basically left the company.
I mean, think about that, for a moment, this guy had 14 years and he just, he just couldn’t, you know, grow the business. He just couldn’t do it. Meanwhile, apple, a dead forgotten company, came out of nowhere during that time from 2000 to 2014.
When balmar took over, right, and Apple came on this beast, come back ends up you know, replacing Microsoft as as one of the biggest if not the biggest company in the world, right? And who would ever thought that?
I mean, but when when literally when bomber took over Microsoft Apple was a joke. I mean, they were done. And by the time bomber, you know, stepped down from CEO in 2014. Apple was the biggest company in the world.
Just think about that for a moment. This is how important a great CEO is for a company because you look at what Satya Nadella is doing. And you look what Steve Ballmer did and it’s like, okay, Steve Ballmer.
You guys probably know him from the famous you know, really popular videos where he laughed at the iPhone when the iPhone was released and things like that, okay? Hey, you know guy owns a clippers now. And hey, at least the Clippers are playing good.
Okay, but at the end of the day, Sasha Nadella is guy has turned around this company into you know, becoming a beast again. Let’s just put it that way from you know, basically just a place where they were not in a good place for a long time.
Okay. Now, if you look at the financials of this company, it shows that this guy’s done a very good job. Take you guys know, as I like to say men lie. Women lie, man. numbers don’t lie. Okay. Look at the income statement for Microsoft over the years.
Three years ago they do $110 billion of revenue two years ago they do $125 billion of revenue. In this past year. They did 143 Baba Baba billion dollars of revenue that has really nice growth. Okay, that’s growth of what $33 billion from basically, you know, three years ago to last year, like that’s a really, really impressive number on top line.
And if you look at bottom line, it’s just as impressive. It’s impressive, okay. They went from 16 billion to 39 billion to $44 billion of net income. Incredible, right? I mean, to go from $16,000,000,000.03 years ago, net income to 44 billion a year ago.
That’s extraordinary accomplishment. Okay, extraordinary caught like this, this crazy, crazy numbers Microsoft has been putting up, okay? balance sheet wise, very, very nice balance sheet on Mr. Softee, okay.
$136 billion in cash, one of the most cash and you know, short term investment, heavy companies, you’re gonna find in the world, literally, like one of the top ones out there, okay. Now, they do have $59 billion of long term debt. But once again, when you have 130 billion plus, in obviously, cash and investments.
You could pay off that debt tomorrow and still have like $70 billion, roughly, or somewhere around there, just literally sitting on your balance sheet in cash and have no debt, but from Microsoft, they probably are paying a super low interest rate on that debt of let’s say, two or 3%.
Like why does Microsoft really want to pay off that debt right away? for them? It probably doesn’t make sense. So, you know, very good balance sheet. Now, keep in mind, if Microsoft was to acquire the entire tic Tock company, which I don’t think can happen.
I think they’re just trying to buy the US part of the business, but if they were trying to acquire the entire company, it would cost them about $50 billion, roughly, okay, somewhere in there, which means essentially, right, either the cash is going to go down, right.
They’re gonna have to, you know, spend a ton of cash or the debts gonna go way up, if they were trying to acquire that entire company, you know, one of those two things is gonna happen to acquire the company, or if they just by Tick Tock America, there’s talk about $5 billion being the number roughly, you know.
I’ve even seen up you know, six and 7 billion potentially be put out there if they just want to acquire the American side of the business. We’ll see what happens there. But you know, if it’s only a $5 billion deal, Microsoft can do that tomorrow. Cash Money is nothing for them.
I mean, absolutely nothing for them. We’ll see what happens there. The interesting thing about this all it is in my opinion, when it comes as Tick Tock deal in this potential here is Microsoft at $77 billion of market capitalization here today after confirming talks to buy Tick Tock in the US seven imagine that okay, for $5 billion deal roughly.
They had $77 billion of market cap and you just got to think to yourself, Is this just some market getting way too excited about things? Or are there other companies out there that maybe her way undervalued because if you’re valuing Tiktok at 77 billion that just seems like you know a little ridiculous.
Especially if we’re for talking only about the US side of tik tok right and you guys saw it here today Microsoft stock was up 5.62% on literally the only news was basically this you know, potential Tick Tock deal.
And when you see something like that, you got to really think what is just the FB platform worth like? Like, really, we got to truly think about this. If the markets go out there and value Tick Tock the just the US side at 77 billion Tick Tock is a complete joke compared to FB they can’t even like be put on the same like pedestal Okay.
It’s like FPS run a whole different game than then tik tok is really what would just FB platform be worth like? 500 billion, right? Think about it for a moment, right? Instagram. Like what is Instagram worth?
If it’s just like a standalone company, I would guess 250 to 350 billion. I mean, if you’re gonna value tik tok just a US arm, which is a complete joke compared to AIG, you’re going to value that at 77 billion you better be willing to you know, pay hundreds and hundreds and hundreds of billions of dollars just for it. Right?
It does kind of make you think a little bit about things differently and maybe think Hmm, you know, maybe FP is a little bit of a deal out there. Let’s put it that way. Especially the way you know, the market value some of these things okay.
No, Microsoft $1.55 trillion market caps one of the biggest companies in the world choosing between them, Apple and Amazon and kind of the the big battle all the time between the three companies on who can be the biggest of the big beast okay.
And right now, the company has a trailing p e of 35.59 and a Ford P of 31.35. So, you know, when you just look at those valuations as far as I’m really talking about the the trailing P and the four p it’s a bit rich, but it’s not crazy for this type of market.
Okay, it’s not crazy. It’s, it’s, you know, when you’re talking about you’re in the 13th year, you’re you’re you’re a bit rich, but you’re not like crazy, okay. But we look at the company’s growth and the company is expect to have nice growth.
Current year 9.6% growth is expected next year 11.5% growth is expected. So, you know, you’re talking about a company that’s, you know, right around roughly double digit growth. And if this company can grow double digits and continue to do that for several years out, you know, the stock price will more than likely trend higher over time because it’s just, you know, not many companies can do those sorts.
Things okay, but when you look at it next to something like FB This is where I have some real questions about me know potentially the valuation of Microsoft, it’s either Microsoft’s a little overvalued or FB is just really undervalued because you’re looking at FB it trades at the same exact valuation right for P of 31.
Just like Microsoft had a foreign pa 31 Okay, but look at the growth rates expected for FB I mean, there aren’t a whole different level than Microsoft k 11.7% revenue growth expected in current year and 24% expected next year, we’re talking FB is grow you know, for outgoing, like over double up the growth level that Microsoft has next year.
Like they’ll over double it up, right? And so it just kind of makes you think, like, is FP like really undervalued? Or is Microsoft a little overvalued? And that’s something you know, we really got to talk about here.
Okay, so my conclusion when I look at the valuation is company, you know, the great management team specifically Sasha, Nadella everything, I feel like you know, the company’s trading a bit rich, but it’s not trading at a crazy valuation.
This is a super solid business model. It is built upon subscription services, cloud business, recurring revenue streams. And so when I look at the business model, I love the business model. And I love the different facets of the business model and the companies they’ve acquired the CEO, Satya Nadella, phenomenal and so I definitely love so much about this company, I really do.
But I will say it’s trading a little bit rash, when you’re talking about you’re paying in the 30s a PE, and you’re, you know, expected to grow somewhere about nine to 11% revenues, you know, you’re trading a little bit rich, you’re not crazy, you’re not you’re not evaluation, like Shopify, or zoom or anything like that.
But you’re trading a little rich there. Okay. So in my opinion, I would rate this stock as a whole right now, if I, let’s say I do not hold Microsoft shares. But let’s say if I, you know, had Microsoft shares.
I would be holding them right now, regardless of the TIC Tock deal, whether the TIC Tock deal works out, or doesn’t work out, I would honestly just hold this stock in my personal opinion. But with that being said, it’s not necessarily a stock that makes me say, I gotta go buy this tomorrow or something like that.
It’s at the same time, if I held this stock, it’s not a stock that I’m like, I gotta go sell the stock or something like that. I just feel like, if you already own it, it’s a hole. If you don’t own it, I don’t necessarily feel it’s a buy because I feel like there’s just better places out there to potentially put your money.
And at the same time, I don’t feel like you should be like, Oh, I got to sell on my Microsoft. Like, why do you got to stop? Yeah, it’s trading a little rich, but it’s a great company. You know, it’s an amazing company just put that way led by a really top level CEO. And you know, that’s a good thing overall.
So that’s my opinion on Microsoft, not a buy, not a sell. It’s actually just a hold in my personal opinion, right now. So hope you guys enjoyed this. As always, if you don’t mind smash that thumbs up that helps a YouTube channel out and also lets me know if you guys enjoy these kind of in depth look videos at a stock that we cover for, you know, 1520 minutes or something like that.
And don’t forget, if you’re looking to scale your stock market portfolio, check out first link in the description down there. Especially if you have five figures plus the stock market, we have a product that can actually help you scale your stock market portfolio as we’ve done with so many people. Thank you for watching and have a great day.