The rising challenges for TikTok in multiple markets one after another has forced ByteDance to explore the possibility of selling TikTok before it’s too late to act.
According to the TheInformation, a group of TikTok investors and the management are brainstorming on the idea of selling a majority stake of TikTok to US investors to tackle the growing concerns of authorities in the US as well as India – two of the most important markets for TikTok outside China.
Though the talk is reportedly in early-stage, experts believe that this could be the last resort for ByteDance to revive itself in the lost markets where the competitors are fast gaining ground.
The possibility of ByteDance selling TikTok holds merit considering all the efforts made by the management to get the company out from hot water have not produced the desired results. Despite assuring the government of India and the US for the data security of their millions of users the challenges for TikTok are far from over.
Reports are making rounds that the US is all set to follow India to ban TikTok by end of this month. On Wednesday, the House of Representatives voted to bar all federal employees from loading TikTok onto their government-issued phones.
The pressure on TikTok is growing steadily and ByteDance has started giving feelers about giving up on TikTok considering no visibility of the road ahead to move further in India and the US. Just a few days back ByteDance founder and CEO expressed his views on selling the company if that’s necessary for the future of the short video sharing app.
The existing shareholders from the US may lead the buyout of TikTok to change the presentation of the company from China-owned to the US-owned. SoftBank, General Atlantic, Sequoia Capital and New Enterprise Associates would come together to acquire a majority stake in TikTok which is being valued to the tune of $25 billion. The company is expecting to post $1.5 billion in revenue in 2020. However, given to the exploded popularity of TikTok in China, India and the US, some investors believe that the current valuation of TikTok could easily touch $40 billion.
For the last few months, the challenges for TikTok has been increasing, and all efforts put by the management to revive the situation is going down the drain. After getting banned in India, the possibility of a ban on TikTok in the US is equally strong now. The blackout is costing the company billions of dollars which has created a panic situation among its investors and management. The ban on TikTok in India alone is estimated to cost the company whopping $6 billion and if the US decides to penalise TikTok in a similar way, the valuation of the company will tank drastically.
Hence, the management and investors are leaving no stone unturned to iron out all the issues and concerns authorities in those countries have. Hiring Kevin A Mayer – the former director of Walt Disney, shifting base out of China and distancing away from Chinese authorities are some of the shots the management has taken recently. However, the trouble for TikTok appears to be far from over anytime soon, eventually resulting in talks about selling TikTok to the US investors.
Even if ByteDance decides to sell out TikTok, it’s going to be a bumpy ride for the management and new investors as such acquisitions are subject to approval. How exactly dust will settle, and when, is anybody’s guess, currently!