Share prices of social media platform Twitter surged by as much as 10 percent on Monday after news broke out that it was engaging in talks to acquire Chinese-owned short-video streaming platform TikTok. Reports of the possible acquisition came amid threats of a potential ban of the app in the country by the Trump Administration.
Following the surge, which took Twitter's share prices to a high of $38.36 per share, the stock corrected by midday and ended at $37.59 per share. The stock continued to trade at the same level and ended Tuesday at $37.28 per share.
Reports of Twitter's alleged plan to acquire TikTok originally came out on Saturday. Sources with knowledge in the negotiations claimed that Twitter had expressed interest in taking over TikTok's U.S. operations.
Industry experts have pointed out that TikTok's market capitalization is likely much larger - estimated to be between $15 billion and $50 billion - than Twitter's market capitalization. With a market cap of only $30 billion, some have expressed doubts about whether the company can afford to buy out the app in the first place.
If Twitter does manage to acquire TikTok, it could resolve existing national security concerns revolving the app being owned by a Chinese company. Twitter's relatively small size could also prevent any antitrust concerns. Twitter previously owned a similar short-video streaming app called Vine, which closed down in 2017.
Apart from Twitter, other investment groups and tech companies have expressed interest in acquiring TikTok's operations from its Chinese parent company ByteDance. Last week, Microsoft announced that it will be pushing forward with its negotiations to take over TikTok. The decision came right after its CEO, Satya Nadella, had discussed the potential move with US President Donald Trump.
Microsoft stated that it plans to take over TikTok's operations in the United States, New Zealand, Canada, and Australia. As part of its agreement, Microsoft said that it will ensure that all private user data will only be routed to US-based servers.
Trump already set a deadline of no later than September 15 for TikTok to find a US-based buyer. If TikTok fails to find a buyer, Trump stated that he would force the company's U.S. operations to shut down. Microsoft stated that should be able to conclude all negotiations before that date, whether or not it would lead to the actual acquisition.