ByteDance investors value TikTok at $50 billion

TikTok

Some investors of TikTok’s parent firm ByteDance trying to take over the social networking app are valuing it at around $50 billion than peers for example Snap Inc, according to people familiar with the issue.

China-based ByteDance is considering a range of alternatives for TikTok relieving pressure from the US to relinquish control of the program, which permits users to create short videos using special effects and has become hugely popular with American teens. The success of the app has helped flip ByteDance into one of a handful of Chinese conglomerates.

The Committee on Foreign Investment in the United States (CFIUS), a US government panel that reviews deals by foreign acquirers for potential national security risks, has increased concerns regarding the protection of the private data that TikTok handles under its Chinese proprietor, Reuters has reported.

Privately held ByteDance has obtained a proposal from a number of its shareholders, including Sequoia and General Atlantic, to transfer majority ownership of TikTok to them, the sources stated. Additionally, it has fielded acquisition interest in TikTok from investment companies and firms, the sources stated.

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The investors’ bid worth TikTok at 50 times its projected 2020 revenue of about $1 billion, according to the sources. By comparison, Snap is valued at 15 times its revenue that was projected 2020, at roughly $33 billion, according to statistics provider Refinitiv.

It is unclear whether ByteDance’s founder and Chief Executive, Yiming Zhang, will probably be happy with the offer. ByteDance executives lately discussed grading projections for TikTok that exceed $50 billion, one of the sources said.

TikTok is increasing quickly as it rakes in more cash in advertising, and its own management team hopes to reach $6 billion in earnings in 2021, one of the sources said.

ByteDance was valued as much as $140 billion earlier this year after one of its own shareholders, Cheetah Mobile, sold a small stake in a private deal, one of the sources said.

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If a bargain for the whole of TikTok can’t be achieved, ByteDance is investigating divesting only TikTok’s US operations, one of the sources mentioned. It isn’t clear what such a deal will be worth and what ties TikTok in the United States would assert with its global operations.

There is not any certainty that ByteDance will agree to any agreement, the sources said. It is pushing forward with structural changes that will further ringfence the US business of TikTok from its worldwide empire, the sources added. These modifications may include a new holding company for TikTok and an independent board, one of those sources mentioned, cautioning that no decision was made. The business has separated TikTok operationally from the programs through dedicated teams.

The resources requested anonymity because the deliberations are confidential.

TikTok Chief Executive Kevin Mayer said in a blog article on Wednesday the company was committed to after US laws, and was allowing experts to observe its own moderation policies and inspect the code that compels its own algorithms. It’ll be taken up by the entire Senate for a vote. The House of Representatives has voted for a comparable measure.

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President Donald Trump and best administrations officials have said they are thinking about a wider ban on TikTok along with other Chinese-linked apps. Approximately 70 percent of the equity funding ByteDance has raised from outside investors has come in the United States, according to one of those sources.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our content partners at Thomson Reuters. Reporting by Echo Wang in New York and Kane Wu and Julie Zhu in Hong Kong. Editing by Greg Roumeliotis, Leslie Adler and Louise Heavens.

 

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