TikTok is difficult to value. Keeping those complications in mind, Forbes spoke with at least nine people and came up with these different scenarios.
If the Supreme Court upholds the ban, TikTok will likely not only disappear from app stores but also stop working in the United States.
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By Phoebe Liu & Matt Durot
The Supreme Court could rule on a potential TikTok ban in the U.S. as early as Wednesday, after justices indicated last Friday they were likely to uphold the federal law in question. The ban would go into effect on January 19, a day before President Trump’s inauguration unless President Biden extends the deadline or Congress passes a new bill introduced on Monday that would give the social media app’s Chinese parent company ByteDance another 270 days to divest. Or ByteDance sells the U.S. version of the platform to American owners. Although ByteDance has indicated that it has no plans to sell TikTok, billionaires—including Frank McCourt—have been making noises about buying it. Notably, the Chinese government is reportedly eyeing Elon Musk as a potential buyer for TikTok, per Bloomberg. (TikTok has called the rumored deal “pure fiction.”)
The big question: How much would TikTok cost? McCourt, the former L.A. Dodgers owner who is leading a group bidding for TikTok through his Project Liberty, has said he thinks TikTok’s U.S. business is worth $20 billion. That’s for the business without its powerful “recommendation engine” which suggests new videos, which McCourt says he doesn’t want and which ByteDance will likely never sell. With the algorithm, Wedbush analyst Dan Ives thinks that $300 billion “could be conservative.” Most people peg the valuation somewhere in between.
TikTok is especially hard to value. There’s not only the question of the prized algorithm but also the fact that it’s currently a division of a private company based in China. And to complicate things even more, TikTok is technically a subsidiary of shell companies registered in the financially-opaque Cayman Islands, which makes it nearly impossible for outsiders to know exactly how much revenue, let alone profit, TikTok makes in the U.S. The Chinese government also owns a small but highly influential slice of one of ByteDance’s other businesses. China has repeatedly insisted that its ability to influence the business is limited to operations outside the U.S. but the Chinese government would have to approve of any sale.
A forced sale during a temporary ban would likely influence what someone might pay for TikTok as well. Counsel for TikTok and ByteDance wrote in court documents that a one-month shutdown could result in a 29% drop in TikTok’s global ad revenue for the year.
There are also potential costs associated with a sale. “TikTok would need to create a lot of new infrastructure that it would lose from its parent company in a potential spinoff,” says D.A. Davidson analyst Gil Luria. “The price would also be limited by the accelerated process and need to buy the entire franchise, as opposed to an IPO, which significantly limits the number of potential buyers.”
Keeping those complications in mind, here are four potential ways to value TikTok:
1. Frank McCourt’s $20 Billion Offer
An investor group led by Frank McCourt, the real estate billionaire who used to own the L.A. Dodgers, thinks that it will be able to buy TikTok in the U.S. without its algorithm for $20 billion. That’s approximately equal to the enterprise value of competitor Snapchat. McCourt didn’t respond to a request for comment, but Benchmark analyst Mark Zgutowicz says one way to get to that number is if they’d valued TikTok based on a multiple of the number of users. Twenty billion dollars equates to about $120 per each of TikTok’s 170 million American users. That’s between the comparable ratios of Snapchat and Meta.
McCourt and Project Liberty, the nonprofit he founded in 2021 to focus on “new Internet infrastructure,” are making the offer in partnership with investment bank Guggenheim Securities, heavyweight law firm Kirkland & Ellis and a consortium of other investors including Shark Tank star Kevin O’Leary. ByteDance, which has repeatedly said that TikTok is not for sale, hasn’t publicly acknowledged the offer.
2. Market’s Multiple Magic
A common way to value a consumer tech company like TikTok is as a multiple of revenue. TikTok generates revenue from advertising, livestreaming videos and e-commerce. In Singapore, where good data is available, the latter two categories made up 83% of 2023 revenue. While TikTok published 2023 revenue of roughly $13 billion for its two other main subsidiaries registered outside of China, it does not disclose its sales for the U.S. Let’s say that U.S. revenue in 2023 was $16 billion, as reported by the Financial Times citing anonymous sources, and that ByteDance’s revenue outside of China grew at least 40% in the first half of 2024, as reported by The Information, citing knowledgeable sources. That gives us a rough guess of $22 billion in U.S. sales in 2024.
Analysts Zgutowicz and Luria then both recommended an enterprise value to revenue multiple of six times, which is somewhere in between that of Snap (3.5x) and Meta (8x). Applying that to the $22 billion revenue estimates would yield a rough value of $132 billion. That’s including TikTok’s algorithm.
3. The $300 Billion Golden Algorithm
ByteDance’s machine-learning powered algorithm is uniquely good at capturing user behavior and captivating users by recommending personalized content such as which new videos to watch. Though ByteDance is unlikely to sell it, and there’s no real precedent for valuing an algorithm separately from an operating company, some analysts have thought about it. For Wedbush’s Ives, the algorithm is gold—he thinks TikTok would be worth $300 billion with it, emphasizing the advertising revenue potential from “200 million potential highly engaged U.S. customers.”
4. Just The Bare Bones
Benchmark’s Zgutowicz actually thinks TikTok’s U.S. revenues are lower than what the FT reported—closer to $13 billion—and guesses it is worth around $55 billion without the algorithm. Ives too thinks it’s worth just $40 billion to $50 billion without the algorithm.
This story was originally published on forbes.com and all figures are in USD.
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