Some investors in ByteDance, TikTok’s parent company, are interested in acquiring the popular social media app and have valued it at about $50 billion, according to a Reuters report.
Pressure from the U.S. government to relinquish control of the app has pushed China-based ByteDance to consider a range of options for TikTok. The Committee on Foreign Investment in the United States (CFIUS), a government panel that reviews transactions by foreign acquirers for possible national security risks, is concerned with how TikTok handles personal data under its Chinese owner.
Sources say ByteDance has received a proposal from come current investors, including Sequoia and General Atlantic, to acquire majority ownership of TikTok. Other companies and investment firms have also expressed interest in acquiring the fast-rising app, sources said.
The investors’ bid values TikTok at 50 times its roughly $1 billion in projected 2020 revenue. To put this number into perspective, data provider Refinitiv values Snap at about $33 billion, which is 15 times its projected 2020 revenue.
ByteDance was valued at as much as $140 billion earlier this year, and sources say its executive team recently discussed valuation projections for TikTok that exceeded $50 billion. TikTok’s management team also expects the app to earn $6 billion in revenue in 2021. With this in mind, it’s unclear whether or not ByteDance’s founder and CEO, Yiming Zhang, will be satisfied with the $50 billion offer.
If ByteDance is unable to reach a deal, reports suggest the company will explore divesting TikTok’s U.S. operations. At this time, it remains unclear what such a deal would be worth or what ties a U.S.-based TikTok would maintain with its global operations.
Though there’s no certainty ByteDance will accept a deal, the company is moving forward with structural changes to ringfence the U.S. side of TikTok from its global empire. Sources hinted at a new holding company for TikTok and the creation of an independent board.
In a blog post, TikTok CEO Kevin Mayer explained, “We believe it is essential to show users, advertisers, creators, and regulators that we are responsible and committed members of the American community that follows US laws.”
Mayer added TikTok has launched a Transparency and Accountability Center where experts can observe the company’s moderation policies and examine the code behind TikTok’s algorithms.
Mayer continued, “We are willing to take all necessary steps to ensure the long-term availability and success of TikTok. The one thing that will not change is our commitment to ensuring that TikTok remains a safe and secure platform for the tens of millions of American families that derive joy from it.”
