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TikTok could soon be sold. Here’s how much it’s worth and who might buy it.

Congressman Raja Krishnamoorthi discusses the future of TikTok


Congressman Raja Krishnamoorthi discusses the future of TikTok

05:37

TikTok could change ownership this time next year, following President Joe Biden on Wednesday. signed an invoice that gives the social media company about 12 months to divest from its Chinese owner or face a U.S. ban.

TikTok is vowing to fight the new law in court, with CEO Shou Chou saying in a video posted on the service yesterday that “the facts and the Constitution are on our side.” He added that TikTok hopes to “establish itself again,” referring to Montana’s efforts to ban the app, which was blocked by a federal judge.

That being said, TikTok is likely to attract the attention of many suitors, given that the social networking service is used by 6 in 10 Americans under the age of 30. Its algorithm delivers constantly scrolling videos, tailored to interests and personal habits of users, creating an addictive flow that keeps them glued to the app.

That could prove extremely valuable to a number of suitors, provided TikTok is sold with its “golden gem algorithm,” Wedbush Securities analyst Dan Ives told CBS MoneyWatch.

With the algorithm, he said, “We estimate that TikTok is worth $100 billion.”

But TikTok’s owner could remove this proprietary technology during a sale, making it much less valuable to potential buyers, Ives added.

Here’s what you need to know.

Who owns TikTok now?

TikTok, with more than 170 million U.S. users, is a subsidiary of Chinese technology company ByteDance, which is why U.S. lawmakers call the company “Chinese-owned.”

But ByteDance’s structure is complicated, with the Associated Press reporting that it is based in Beijing but registered in the Cayman Islands.

TikTok, for its part, says its alleged ownership by a Chinese company is a myth. In a 2023 posting on its website, the video platform states that ByteDance is 60% owned by global institutional investors, including Susquehanna International Group, Carlyle Group and General Atlantic. Another 20% is owned by ByteDance employees, while the remaining 20% ​​is owned by its founder, Chinese entrepreneur Zhang Yiming, the company says.

How much is TikTok worth in 2024?

TikTok is probably worth $100 billion, according to Dan Ives, an analyst at Wedbush Securities.

But this assessment is based on TikTok’s algorithm, the logic written into the software that decides which videos to offer to its users in a constant stream. Without the algorithm, the company could be sold for a much lower price, Ives said.

“We think China and ByteDance will never sell this with the golden jewel algorithm. Without the algorithm, we think TikTok is worth $30 billion to $40 billion,” he told CBS MoneyWatch.

Who could buy TikTok?

Likely contenders would be Microsoft, Oracle and Walmart, Ives said. But other companies and investors are likely to express interest, he added.

“Private equity is also going to swarm after this deal with (former Treasury Secretary Steven) Mnuchin and others,” Ives said.

Mnuchin told CNBC last month that he was working on a coalition of investors to acquire TikTok, anticipating the divestment or ban bill would become law. “It’s a great deal and I’m going to put together a group to buy TikTok,” Mnuchin told CNBC.

How likely is TikTok to be sold?

It’s hard to say, but Ives said he thinks there’s a 75% chance TikTok will have a new owner by early 2025.

At the same time, TikTok has already managed to block a ban through legal action, before a federal judge. decision late last year, Montana’s attempt to ban the service “exceeds state power and infringes on the constitutional rights of users and businesses.”

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