Shares are up about 4.5% on Monday as rumors continue to swirl about the company’s possible acquisition of TikTok’s U.S. operations.
Of course, it helps that certain social media stocks have momentum at the moment, like Facebook (FB) - Get Report and Pinterest (PINS) - Get Report. However, the longer term bullish thesis for the deal centers on growth, even if Microsoft has to pay a pretty penny to get it.
Unlike Apple (AAPL) - Get Report, Alphabet (GOOGL) - Get Report (GOOG) - Get Report and others, Microsoft isn’t under the same regulatory microscope as its peers. So while many of these companies -- well, likely not Apple -- would love a crack at buying or owning a stake in TikTok, most likely are not in a position to do so.
We’ll know the outcome soon enough, with Microsoft aiming to have negotiations wrapped up by Sept. 15.
Microsoft, Apple, Amazon, Facebook and Alphabet are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells MSFT, AAPL, AMZN, FB or GOOGL? Learn more now.
Trading Microsoft Stock
The stock didn’t quite work its way down to the 50-day moving average. Instead, investors continued to buy the dip, while a very nice bull flag pattern took shape. This is a great consolidation pattern, which is giving way to the upside with Monday’s move.
However, there were clues leading up to the action. First, shares were bubbling under the $205 level, seemingly waiting for any catalyst to break it out over this mark. Second, Microsoft stock recorded an impressive reversal off the Friday lows to close higher on the day.
Now clearing the 138.2% extension and channel resistance, bulls have their sights set on higher prices.
Specifically, investors should keep an eye on the all-time high at $216.38. Above that and Microsoft stock may rotate over last month’s high, putting the 161.8% extension in play near $225.
Above that and momentum could accelerate, potentially putting the two-times range extension in play near $247.
On the downside, see that Microsoft holds the 138.2% extension and the 20-day moving average. Below will have me looking for an official test of the 50-day moving average.