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In a highly delicate situation in the United States, TikTok has just over a month to sell its American assets to a local entity, or face a ban in the country. But what is the value of the social network, exactly ?
Donald Trump's estimate is far from reality
That of its parent company, ByteDance, is known. As part of a share buyback offer last November, the Chinese giant established its valuation at $300 billion. It is one of the most valuable startups in the world, just behind SpaceX and ahead of OpenAI. On the other hand, the value of TikTok has not been revealed. Since the company is not listed on the stock exchange, it has no obligation to publish its financial results.
Asked about the cost of the application when signing an executive order to grant it an additional cost in the United States, Donald Trump estimated it at ” 1 trillion dollars “. An estimate that is far from reality. For comparison, Meta’s market capitalization is $1.5 trillion. This includes all of the company’s branches, including Facebook, Instagram, WhatsApp and Reality Labs, its unit dedicated to virtual reality.
To get an idea of TikTok's value in the United States, it is important to remember that we are talking only about the application and, above all, its American assets: the transaction would only concern the social network in the United States, and not in the rest of the world. Of course, this is its largest international market, with a total of 170 million users.
And the figures speak for themselves: its American advertising revenues are expected to reach $15.5 billion in 2024 according to eMarketer. In France, they amounted to €44.3 million in 2022, reports L’Informé.
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The algorithm will be a determining element
Another aspect that should not be forgotten when determining the value of TikTok : its powerful algorithm. This is its secret ingredient, which has allowed it to achieve exponential growth, much faster than that of its great American rival Instagram. Because it is able to determine what pleases the user, and to offer them adapted content. Enough to hypnotize him on the application.
With the algorithm, TikTok's American activity costs 300 billion of dollars, says analyst Dan Ives. However, it is very unlikely that ByteDance will agree to sell it in a transaction. That would make it lose a huge competitive advantage and, worse, to the benefit of an American company. It is not certain that the Chinese government will agree, either.
It is therefore a sale of TikTok without its algorithm that seems, for the moment, to be taking shape. In this case, the purchasing entity would have to pay between 40 and 50 billion dollars, estimates the expert.
For his part, Donald Trump has the ambition to set up a joint venture with the American government, which would hold 50% of TikTok. For the private part, several names are mentioned: Elon Musk, MrBeast, Frank McCourt or Larry Ellison, the president of Oracle.
- TikTok must be sold to an American entity to avoid the ban in the country.
- While no official figure has been shared regarding the value of the app’s American assets, several factors must be taken into account to assess it.
- TikTok would be worth much less without its algorithm, and it’s a safe bet that ByteDance will refuse to sell it to an American entity.
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