Link to join StockHub free investing discord server: Want to join our free STOCKHUB discord chat? Here is the link
Well guys not sure if you heard word on the street or not but microsoft has confirmed talks to buy tick-tock in u.s and they aim to finish a deal by september 15th there’s been a lot of confusion about this potential deal is microsoft trying to buy the entire tick tock company or just the u.s side there’s 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 as held talks with chinese technology company bite dance to acquire its trendy social app tick tock in the u.s microsoft said in a statement that it will keep working with the us government on a deal that it intends to conclude talks by september 15th 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 this was obviously big news and here we have microsoft potentially buying maybe at
Least the us arm if not the entire tick tock company out which by the way if you’re thinking you know microsoft couldn’t buy the entire tick tock company they actually could they could actually easily afford the company we’ll look at how much they would have to pay if they bought the entire operations or just the u.s side 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 uh basically a social media’s hand because we know twitter what us-based right snapchat us-based ig facebook right all us-based and so it’s like this one social platform comes in that’s not us-based it’s from china and also 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 gonna assume that the deal for tick tock goes through okay that’s what we’re gonna assume for this video we’re gonna 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 i’ll try 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 the thumbs up button that definitely
Helps out the channel and unless we 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 to check out that first link in the description okay mr softie 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 okay one is called productivity in business process the other is called intelligent cloud and the other is called more personal computing now we’ll look at those businesses more intensely in a
Moment and kind of you know we’ll look at those in depth because when you just hear those general words there it’s like what does that actually mean what is the 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 this revenue goes okay they just reported earnings here about two weeks ago now okay earnings came in at a dollar 46 this year versus a dollar 34 was expected a nice beat there revenue came in at 38.03 billion versus 36.5 billion was expected so about a 1.5 billion dollar beat on top line microsoft’s overall revenue grew 13 on an annualized basis in the
Quarter which ended june 30th according to a statement revenue went up 15 in the prior quarter but obviously with roni rona’s 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
The azure which i hope i pronounced that right i don’t know if i ever pronounced it i always called azur 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 their reserve 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 roanoke situation that obviously hurt business okay office 365 commercial nice growth 19 there now search ads excluding traffic acquisition costs that was the one
Really negative number okay negative 18 percent i think a lot of that honestly at the end of the day has to do with ronnie ronan just a lot of ad rates being down across the board okay server products in cloud services that number was up 19 windows commercial products and cloud services was up nine percent and look at xbox business with the strongest growth has
Probably had in forever okay 65 growth broken out there from xbox content services we know obviously you know uh with the roney rona situation a 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 to do especially when you know all the kids went out of school and then you had you know uh mass amounts of people unemployed uh during the whole situation okay and this 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 deal 7.5 billion microsoft announced it had 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 life cycle 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 linkedin a massive deal there a lot of you guys you know especially if you’re a 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 and the github business as well which are very large acquisitions in
Terms of the linkedin we just saw the 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 uh 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 sasha nadella first took over the reigns 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 8 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 led this company from 2000 to 2014 okay and you know steve
Ballmer you know uh 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 balmer 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 so 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 and forgotten company came out of nowhere during that time from 2000 to 2014 when baltimore took over right and apple came on this beast comeback ends up you know replacing microsoft
As as one of the biggest if not the biggest company in the world right and who would have ever thought that i mean when when literally when baltimore took over microsoft apple was a joke i mean they were done and by the time balmer 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 sasha 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 the clippers now and uh hey
At least the clippers are playing good okay but at the end of the day sasha nadella this 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 okay you guys know as i like to say men lie women lie man numbers don’t lie okay look at the income statement from microsoft over the years three years ago they do a hundred and ten billion dollars of revenue two years ago they do 125 billion dollars of revenue in this past year they did 143 billion dollars of revenue that is really nice growth
Okay that’s growth of what 33 billion dollars from basically you know uh 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 not more impressive okay they went from 16 billion to 39 billion to 44 billion dollars of net income incredible right i mean to go from 16 billion
Three years ago net income to 44 billion a year ago that’s extraordinary accomplishment okay extraordinary cause like that’s just crazy crazy numbers microsoft has been putting up okay balance sheet-wise very very nice balance sheet on mr softy okay 136 billion dollars 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 dollars 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 dollars roughly or somewhere around there just literally sitting on your balance sheet in cash
And have no debt but for microsoft they probably are paying a super low interest rate on that debt of let’s say two or three percent 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 tick tock company which i don’t
Think is going to happen i think they’re just trying to buy the u.s part of the business but if they were trying to acquire the entire company it would cost them about 50 billion dollars roughly okay somewhere in there which means essentially right either the the cash is going to go down right they’re going to have to you know spend a ton of cash or the debt is
Going to go way up if they were trying to acquire that entire company you know one of those two things is going to happen to acquire the company or if they just buy tick tock america there’s talk about five billion dollars being the number roughly you know i’ve even seen up you know six and seven 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 five billion dollar deal microsoft can do that tomorrow cash money and it’s nothing for them i mean absolutely nothing for them we’ll see what happens there the interesting thing about this all is in my opinion when it comes to this tick tock deal in this potential here
Is microsoft added 77 billion dollars of market capitalization here today after confirming talks to buy tick tock in the us seven imagine that okay for a five billion dollar deal roughly they had 77 billion dollars of market cap and you just got to think to yourself is this just a market getting way too excited about things or are there other companies out
There that maybe are way undervalued because if you’re valuing tick tock at 77 billion that just seems like you know a little ridiculous especially where we’re talking only about the u.s side of tick tock 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 if the market’s gonna go out there and value tick tock the just the u.s 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 fb’s running a whole
Different game than than tick tock is like what would just fb platform be worth like 500 billion right think about ig for a moment right instagram like what is instagram worth if it’s just like a standalone company i would guess 250 or 350 billion i mean if you’re gonna value tick tock just a u.s arm which is a complete joke compared to ig you’re gonna value
That at 77 billion you better be willing to you know pay hundreds and hundreds and hundreds of billions of dollars just for ig right it does kind of make you think a little bit about things differently and maybe think hmm you know maybe fb 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 now microsoft 1.55 trillion dollar mark caps one of the biggest companies in the world it’s usually between them apple and amazon and kind of this the big battle all the time between the three companies on who can be the the biggest of the big beasts okay and uh right now the company has a trailing p 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 4p 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 30s 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 expected 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 it 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 of things okay but when you look at it next to something like fb this is where i i have some real questions about you know potentially the valuation of microsoft it’s either microsoft’s a little overvalued or fb is just really undervalued because you look at fb it trades at the same exact valuation right 4p of 31 just
Like microsoft had a 4p of 31. okay but look at the growth rates expected for fb i mean they’re on a whole different level than microsoft okay 11.7 percent revenue growth expected in current year and 24 expected next year we’re talking fbs grow you know far outgrowing like going 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 fb 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 valuations 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 sasha nadella phenomenal and so
I definitely love so much about this company i really do uh but i will say it’s trading a little bit rich when you’re talking about you’re paying in the 30s a pe and you’re you know expected to grow somewhere around 9 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 hold right now if i if 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 tick tock deal whether the tick 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 got to go buy this tomorrow or something like that and at the same time if i held the 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 whole if you don’t own it i don’t necessarily feel to
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 gotta sell out on my microsoft like why you gotta sell yeah it’s trading a little rich but it’s a great company you know it’s an amazing company it’s just put that way led by a really top-level ceo and uh 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 uh right now so i 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 15 20 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 you
Transcribed from video
Is Microsoft a Stock To Buy Now with Tiktok deal coming?! By Financial Education
