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Business tycoons like Elon Musk should be prepared to spend tens of billions of dollars on TikTok's U.S. operations if parent company ByteDance decides to sell.
TikTok is considering a potential US ban if The Supreme Court decides to maintain national security law that service providers such as Apple AND Google will be punished for making the application available after the Sunday deadline. ByteDance has not indicated that it will sell the US unit of the app, but to the Chinese government he considered a plan under which owner X Musk will, under several scenarios considered, take over the operations of Bloomberg News reported Monday.
If ByteDance decides to sell, potential buyers would have to spend between $40 billion and $50 billion. This is the assessment of Angelo Zino, senior vice president for research at CFRA estimated for TikTok's US operations. Zino based its valuation on estimates of TikTok's U.S. user base and revenues compared to competing apps.
According to estimates by the market research firm, TikTok has about 115 million monthly mobile users in the U.S., slightly less than Instagram's 131 million users Sensory Tower. This puts TikTok ahead of others Snapchat, Pinterest AND Redditwhose monthly U.S. mobile user base is 96, 74 and 32 million, according to Sensor Tower.
Zino's estimate, however, is down from the more than $60 billion he estimated for the entity in March 2024, when the House passed President Joe Biden's initial national security bill signed into force next month.
The lowered estimates are due to TikTok's current geopolitical situation and the fact that “industry metrics have moved up a bit” since March, Zino told CNBC in an email. Zino's estimates do not include valuable TikTok recommendation algorithms that a U.S. buyer would not obtain as part of the deal, with the algorithms and their alleged ties to China being central to the U.S. government's claim that TikTok poses a national security threat.
Analysts at Bloomberg Intelligence estimate that TikTok's U.S. business will be between $30 billion and $35 billion. They published such estimates in July, stating then that the value of the device would be “reduced due to forced sale.”
Bloomberg Intelligence analysts noted that finding a buyer for TikTok's U.S. operations that can afford the deal and can handle the accompanying regulatory scrutiny over data privacy is a challenge for the sale. It could also make it more difficult for the buyer to grow TikTok's advertising business, they wrote.
A consortium of entrepreneurs, including a billionaire Frank McCourt and O'Leary Ventures CEO Kevin O'Leary have made an offer to buy TikTok from ByteDance. O'Leary previously said the group would be willing to pay up to that amount $20 billion seizure of American assets without an algorithm.
Unlike Musk's offer, O'Leary's group's offer will be free from regulatory scrutiny, O'Leary said in a Monday release interview from Fox News.
O'Leary said he was a “huge fan of Elon Musk,” but added that “the idea that a regulator, even under the Trump administration, would allow this to happen is pretty slim.”
TikTok, X and O'Leary Ventures did not respond to requests for comment.
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