What is TikTok worth? Anywhere between $20 billion to over $100 billion

US president Joe Biden signed the legislation after US Congress approved the bill to sell Tiktok’s US operations in recent days. To stop the bill from being implemented, TikTok is preparing to sue on the ground of free speech. The legislation has given the parent company of TikTok, Byte Dance, up to a year to find a suitable buyer otherwise it will have to face the US ban. The question that arises now is how much is TikTok worth.

A measure set to force TikTok's parent company to sell the video-sharing platform or face a ban in the US received president Joe Biden's official sign-off.(AP)

The company’s shares are distributed. ByteDance’s founder, Zhang Yiming, according to the firm, owns 20% of ByteDance, but he has more voting rights because of super shares. The company's employees hold 20% shares. Global institutional investors such as General Atlantic, Susquehanna International Group, and Carlyle Group own over 60% of ByteDance.

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People familiar with the subject claimed as per Wall Street Journal that executives at ByteDance last year said TikTok would be for as much as half of ByteDance's valuation, which is $100 billion. However, a lot of people disagree and believe that TikTok is worth much less. Last year, TikTok’s revenue from advertising and live streaming, its main revenue sources, was about $22 billion. Since this is the first transaction of its kind in the tech business, there are a lot of unknowns, and it will be challenging to determine the precise value.

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Other problems to be considered are: how will the business be sold - Would the whole international business be sold, which has more than one billion users, or just the US operations with around 170 million users? Also, would the algorithm be included in this because apparently, China has made it clear that it is not willing to sell that?

America is the biggest market for TikTok. Despite hitting its ad-sales target, the users are declining on TikTok in the USA. It’s also uncertain if TikTok is profitable as of now.

TikTok Chief Executive Shou Zi Chew said that selling only the US business will break the app because the app is such that the US content appeals to people outside the USA as well.

Investors and business leaders expressed ByteDance's belief that the algorithm is the secret to TikTok's addictive and enjoyable nature. It may be necessary for buyers to build their own system and place bids on TikTok without the algorithm.

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