World Stock Watch

TikTok’s Uncertain Future: A $40 Billion Price Tag?

The popular social media app TikTok is facing an uncertain future in the United States, with a potential ban looming if the Supreme Court upholds a national security law. As a result, parent company ByteDance may be forced to sell its U.S. operations, with estimates suggesting a staggering price tag of $40 billion to $50 billion.

A Valuation Based on User Base and Revenue

According to CFRA Research Senior Vice President Angelo Zino, TikTok’s U.S. operations are valued at $40 billion to $50 billion, based on estimates of its user base and revenue in comparison to rival apps. With approximately 115 million monthly mobile users in the U.S., TikTok trails only Instagram in terms of popularity.

A Lowered Estimate Due to Geopolitical Concerns

Zino’s estimate is down from his previous valuation of over $60 billion in March 2024, due to TikTok’s current geopolitical predicament and the decline in industry multiples. The lowered estimate does not include TikTok’s valuable recommendation algorithms, which a U.S. acquirer would not obtain as part of a deal.

Analysts Weigh In on the Potential Sale

Analysts at Bloomberg Intelligence have pegged the value of TikTok’s U.S. operations at $30 billion to $35 billion, citing the challenges of finding a buyer who can afford the transaction and navigate regulatory scrutiny on data privacy. A consortium of businesspeople, including billionaire Frank McCourt and O’Leary Ventures Chairman Kevin O’Leary, has put in a bid to buy TikTok from ByteDance, with O’Leary stating that the group would be willing to pay up to $20 billion to acquire the U.S. assets without the algorithm.

A Challenging Sale Ahead

The potential sale of TikTok’s U.S. operations is fraught with challenges, including finding a buyer who can afford the transaction and deal with regulatory scrutiny. Additionally, expanding TikTok’s ads business may prove difficult for a new owner. As the situation unfolds, one thing is clear: the future of TikTok in the United States hangs in the balance.