Dow Jones gets 300 points; Apple could suffer from WeChat Ban; Microsoft’s TikTok deal seeks long opportunities


De Dow Jones industrial average (DJINDICES: ^ DJI) posted Monday the other major stock indices to scan, up 1% by 1:45 pm EDT. A lot has happened: A new incentive bill is still being debated in Congress, executive orders from President Donald Trump have increased tensions with China, and the daily incidence of COVID-19 continues to increase in the US, but is trending lower.

Call (NASDAQ: AAPL) stock contributed to the Dow’s gains on Monday thanks to a slew of analytical price targets, and despite a speculation by a separate analyst for how bad things could turn out for the company if the executive order targeted by China’s WeChat is taken to an extreme. Meanwhile Microsoft (NASDAQ: MSFT) stock went lower than its deal for Chinese social media app TikTok looks increasingly unlikely.

Transport containers painted with American and Chinese flags.

Image Source: Getty Images.

WeChat ban could hurt Apple

On August 6, Trump issued an executive order that would effectively ban Chinese-owned WeChat Tencent, in 45 days in the United States. While the exact details will not be determined until the 45-day period is lost, the worst-case scenario is bad news for Apple.

Analyst Ming-Chi Kuo estimates that Apple’s worldwide worldwide iPhone shipments could drop by as much as 30% if the company is forced to remove the WeChat app from its App Stores in all countries. If the executive order requires Apple to uninstall the app only in the United States, Kuo predicts a modest decline of 3% to 6% in iPhone sales. WeChat is by far the most popular messaging app in China, with a monthly user base above 1 billion.

Despite the potential downside for the tech giant related to the WeChat ban, shares of Apple were up 1.3% by Monday afternoon. Part of the reason is probably some positive analyst comment from Wedbush. Wedbush on Monday raised its price target on the Apple Stock Exchange from $ 475 to $ 515, driven by heightened optimism for the company’s upcoming iPhones. Under the best-case scenario, Wedbush sees Apple stock rise to $ 600.

Apple is facing a lot of uncertainty. The company will launch new iPhones later this year in a very weak economy, and the WeChat ban has the potential to derail its business in China. Despite this, the stock is trading right around its full time. It will not take much bad news to send the stock market tumbling.

Long odds for Microsoft deal for TikTok

Chinese social media app TikTok will also be effectively banned in the United States in 45 days, via a separate executive order. Microsoft has been in talks to get the US operations of the app, which could potentially solve the US government’s data security issues. But a deal looks less likely.

South China Morning Post reports that the Chinese owner of TikTok, ByteDance, is preparing for an escalation of its legal battle against the US It has also quoted a source as saying that the chance that Microsoft will buy TikTok is at most 20%. The chance of Twitter, another potential suiter, buying the company are even lower due to the lack of Twitter resources.

It may be best that a deal is unlikely to happen. Microsoft would probably have to shell out tens of billions of dollars for the app, and it would expose it to regulatory scrutiny and the trade war between the US and China. Microsoft co-founder Bill Gates called the deal “a poisoned calf” in an interview with Wired, and mentions the disadvantages of Microsoft becoming a major player in social media.

The Microsoft stock market was down 2.1% on Monday afternoon, although it is not clear whether the TikTok deal was the driving force. Like Apple, Microsoft’s stock market betrays close to its full time. And like Apple, it will not take much bad news to put pressure on the front.