TikTok is generating big bucks in the U.S. which might hike the price that the unit sells for
Even though the U.S. government is working on legislation that would ban TikTok in the country (unless current parent ByteDance divests itself of the platform), there is no denying that the app is a huge success in the states. U.S. revenue totaled $16 billion last year and with strong results like that, if ByteDance does decide to sell its stake in TikTok, it could ask for and receive a larger sum than it originally expected.
The Financial Times cited five sources familiar with TikTok's financial situation who said that not only was the $16 billion in revenue generated in 2023 the highest total in TikTok's U.S. history, but the amount could push the value of the platform to a figure as high as $150 billion. What makes a divestiture of TikTok easy for ByteDance to stomach is the fact that most of the Chinese company's revenue comes from its operations located in China. Since ByteDance is not a public company, its financial records are private.
ByteDance had total revenue of $120 billion last year, up 40% from 2022's top-line number. And while ByteDance did have profits of $28 billion last year, TikTok is still spilling red ink which is something that any potential buyer is going to have to consider when formulating a bid. ByteDance is believed to have a close relationship with the Communist Chinese government and there is concern that TikTok collects U.S. user's personal information and sends it to a server sitting on a desk in Beijing.
TikTok generated $16 billion in revenue from the U.S. last year
The Protecting Americans from Foreign Adversary Controlled Applications Act, which would ban TikTok in the U.S. unless divested by ByteDance, passed the House by a 352-65 margin. The bill is targeted at TikTok, but could also impact other apps that collect user profiles from U.S. users and are "controlled by a foreign adversary." This means that such apps cannot be "subject to the direction or control" of someone in Russia, China, North Korea, or Iran.
The bill now moves to the Senate where it is expected to have a harder time passing. If it does, the House and Senate reconcile any differences between their bills and vote. If the bill passes both the House and Senate, the next stop is the president's desk and President Biden has said that he will sign the bill if it reaches his desk.
China, on the other hand, is opposed to a forced sale of TikTok although Beijing will have to sign off on any deal reached to buy the platform from ByteDance.
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