
ByteDance investors value TikTok at $50B in takeover bid - adventured
https://www.reuters.com/article/us-bytedance-tiktok-exclusive/exclusive-bytedance-investors-value-tiktok-at-50-billion-in-takeover-bid-sources-idUSKCN24U1M9
======
alehul
Many are suggesting that TikTok would be overvalued at $50B.

If that's the case, do you believe FB is overvalued at $662B? Instagram, as of
2018, was estimated to be worth around $100B on its own (with about 1b MAUs,
versus TikTok's 800m).

TikTok seems at least equally addictive, and its algorithm does a fantastic
job at quickly showing good content that matches your interests.

~~~
paulpauper
At this point, give how wrong over the past decade pundits have been about
Tesla, Uber, Facebook, Shopify, Amazon (and many others), I am inclined to
discount/ignore any prediction of a rapidly-growing consumer tech or app
company being a bubble. These pundits have a horrible track record of
predicting this sort of stuff. A common thread for why these forecasts tend to
be so bad is, such pundits ignore the growth of free cash flow and operating
profit margins, erroneously lumping one-time expenses as being the same as a
recurring cost. Yes, they can both make a company lose money, but a company
that does not incur recurring advertising and other expenses is in a much
better position than a company that loses money on every sale/user-acquisition
and tries to make it up on scale. This was the problem with Groupon and also
Fab. They advertised heavily on Facebook in 2010-2011, paying way more in
recurring costs to acquire users then they could ever hope to recoup from
sales. If you are paying $1-2/click (Facebook ads are expensive, especially
for US adult traffic) and given all the click fraud and fake likes, maybe only
1/50-1/100 convert, if you cannot extract at least $100 of value from each
user, you die.

~~~
freehunter
A bear would say those pundits have been wrong _so far_ and will eventually be
proven right.

Is there any real reason why Tesla should be worth more than the rest of the
US auto industry combined? Can Uber ever actually turn enough profit to
justify their valuation? At what point does Amazon stop growing and their PE
ratio start mattering?

Right now investors seem to believe that these companies have a very bright
future ahead of them. Some of these companies have had “a very bright future”
for over 20 years now. Some of these companies have very bright futures even
though they’re only supported by investors and have never made any money of
their own. Uber, for example, lost $8.5b in 2019 and are surely going to lose
a ton this year too.

In the long run, how many SV unicorns and traditional companies pretending
they’re tech companies will actually prove their valuation was right? A bear
would say very few.

~~~
thephyber
> Is there any real reason why Tesla should be worth more than the rest of the
> US auto industry combined?

I think this is like asking "Should Amazon be worth more than all e-tailers
combined?" circa 2009. Both of their businesses are growing in tangential
directions to their core business. In just about 5 years, AWS turned from some
"nice supplemental income" to becoming the company's new core product.

The Tesla bulls are betting that Tesla's energy collection and storage
products will grow to eclipse their car business and take advantage of the
economy of scale of the GigaFactories. The bears are only looking at Tesla as
a niche car company.

------
paulpauper
These ppl who say tech is a bubble need to give it a rest. They have been
saying since 2009 that Amazon, Tesla, Facebook, Uber, AirBNB, Instagram, etc.
are a bubble, and have wrong ever since as valuations keep rising. The
pandemic has only made apps more valuable, due to physical stores being closed
and unemployed people having more free time to use apps. They, these bubble
forecasters, were only right in the 80s (video game and PC bubble) and late
90s (dotcom and communications bubble) but this time really is different. A
reason is, an individual's daily time on social media and apps can be divided
into arbitrarily tiny slices or overlapping slices, so this allows many huge
companies to make money, as opposed to the finite constraints of hardware
companies faced in the past (you cannot spend an hour simultaneously playing
on a Sony, Sega and Nintendo system; you have to choose one or split it up).
So imagine if someone has 1 hour/day uninterrupted to spend on apps and social
networking, so this can be at home, or during lunch, etc. A person who uses
that hour on multiple social networks and apps gets exposed to each
network/app's ads, so now rather than seeing only an Instagram ad or Facebook
ad, now sees a TikTk ad, a Snapchat ad, etc. Many people keep 5+ social
networks open at once and get exposed to all their respective ads. It is sorta
like watching TV and listening to the radio at the same time and getting both
the TV and radio ads.

~~~
socalnate1
"But this time really is different." Sigh...

~~~
philosopher1234
Could you explain why you disagree?

~~~
soulofmischief
You're sampling a 10-year span according to your argument. That's not enough
time to ascertain if this is a bubble. I'd hold off on making assertive
comments about the trajectory of Silicon Valley for now.

~~~
dpedu
That's 1/3rd of the time the Web itself has existed.

------
paulpan
It's sort to sad to see TikTok being forcibly sold off due to geopolitical
factors, rather than on more business ones (e.g. competitiveness).

Despite the controversy with its personal data leakage, TikTok has been
massively successful and put the established players like Facebook, Twitter
and even YouTube on alert. Competition forces companies to improve and just as
we need Android to hold iOS accountable, etc TikTok is a good counterbalance
to Facebook.

Another dimension is that the tech space is either dominated by U.S. companies
or regionally segmented (e.g. Whatsapp in Europe, Wechat in China). TikTok was
exciting as a non-U.S. product that grew viral globally. If ByteDance is
forced to sell to a U.S. company, then it's back to the status quo.

~~~
fokinsean
> due to geopolitical factors

They kind of dug themselves in hole with how sketchy the app is

~~~
borg_
and how sketchy exactly is it?

~~~
Baeocystin
[https://www.privateinternetaccess.com/blog/tiktok-seems-
to-b...](https://www.privateinternetaccess.com/blog/tiktok-seems-to-be-
copying-and-pasting-your-clipboard-with-every-keystroke/)

~~~
borg_
[https://www.theverge.com/2020/7/3/21312821/linkedin-app-
ios-...](https://www.theverge.com/2020/7/3/21312821/linkedin-app-
ios-14-clipboard-copying-fix)

This does not seem specific to tiktok at all. Would you jump in on discussions
on LinkedIn and claim "Not surprised, given how sketchy LinkedIn is?"

~~~
fokinsean
There's not only clipboard issues, this Reddit user did some digging and found
some interesting things.

[https://old.reddit.com/r/videos/comments/fxgi06/not_new_news...](https://old.reddit.com/r/videos/comments/fxgi06/not_new_news_but_tbh_if_you_have_tiktiok_just_get/fmuko1m/)

------
hellomyguys
50B would be a steal imo. Don't get me wrong, this is still the early days for
TikTok, but as a platform, TikTok seems way more compelling and interesting
than Instagram at this point. Especially for younger people who are tired of
the social behavior that's formed on IG. Even though the user base is
primarily younger folks, they're doing a good job of aging up too. Core
product value is way easier to deliver than Snap for older people.

~~~
mschuster91
> Especially for younger people who are tired of the social behavior that's
> formed on IG.

Eternal September: what has happened to Instagram will also happen to TikTok.

Additionally there is the very real risk that TikTok will be seen by
governments as what it is: Chinese spyware. India has already banned it, I
_hope_ that the rest of the world follows suit.

~~~
hellomyguys
>Additionally there is the very real risk that TikTok will be seen by
governments as what it is: Chinese spyware. India has already banned it, I
hope that the rest of the world follows suit.

Well that's why the investors are trying to take it over.

>Eternal September: what has happened to Instagram will also happen to TikTok.

Definitely agree this is always a concern, but the type of content that is
rewarded on TikTok makes it less exploitable by people who build followings by
posting low-effort content that looks good aesthetically.

~~~
mschuster91
> Well that's why the investors are trying to take it over.

As long as China has anything meaningful to say, that won't be enough.

> but the type of content that is rewarded on TikTok makes it less exploitable
> by people who build followings by posting low-effort content that looks good
> aesthetically.

Lol most of the stuff that goes viral on Tiktok is essentially that. People
scaring cows ffs (look up "kulikitaka challenge"). Can't get much more "crap"
than this.

~~~
hellomyguys
>Lol most of the stuff that goes viral on Tiktok is essentially that. People
scaring cows ffs (look up "kulikitaka challenge"). Can't get much more "crap"
than this.

That's not what my FYP looks like and I don't think most people would agree
TikTok and IG content aesthetics are similar... but even scaring cows sounds
more entertaining than a picture of an influencer on the beach.

~~~
mypalmike
Cow memes and beach photos of vapid nobodies. We truly do live in the future,
and it's as amazing as we all hoped. And anyone saying there's a bubble
doesn't understand the value of eyeballs. I mean influencers.

------
chvid
This is from Twitter and might be a hyperbole or conspiracy:

Overheard on current US war on Tiktok. A thread:

Talks abt ban on Tiktok subsiding a bit because Tiktok in talks with General
Atlantic and Sequoia to sell to a US shell company. US demanding that Tiktok
technical staff be completely changed, AI algorithm be based in the US...

Continued at
[https://twitter.com/CarlZha/status/1288284750273114112](https://twitter.com/CarlZha/status/1288284750273114112)

~~~
eunos
> AI and tech team evaluated by NSA

Suppose that PRC considers to open the GFW but with the same requirements (AI
and tech team evaluated by MSS). Would that be acceptable?

~~~
chvid
That sounds like a good deal. I will ask my higher ups.

~~~
pjc50
That is a _terrible_ deal, because it amounts to letting them clone your
technology in depth.

On the other hand, until the US kicked over the table, the UK had a national
security oversight centre for Huawei where people with UK security clearances
performed code review ..

~~~
3pt14159
Yeah but they don't pretend that it is foolproof. It's the typical government
"we have to do something" answer to a fundamental problem. Software defined
networks are not secure from state level interference and everybody in tech
that is honest knows it. And since they are not secure, and not easily
monitored with strong encryption they're the perfect delivery vector for
targeted malware. I wish we had the political will in the liberal alliance to
say no to networking gear originating from countries like China.

~~~
earthboundkid
There are two questions about the CCP and spyware: is it technically possible
and do they have the political will to do it?

I don't think the CCP is putting spyware into the iPhone because it's only
barely technically possible and they don't have the will to risk it. Getting
caught with your hand in the cookie jar there would be the end of their whole
economic strategy.

Would the CCP put spyware into Tik Tok? It's trivially possible, and the will
is absolutely there. I would be more surprised if it were somehow proved that
they weren't interfering with Tik Tok on some level.

Would the CCP put spyware into 5G? AFAICT, it would be technically possible,
and the payoff from it would be so huge that they might have the will for it,
but it's a close thing. Hard to say definitively either way. I think the
industrialized nations should make their own 5G, just so they're not shut out
of a growth industry, but the spy thing is sort of a wild card that could be
something or nothing.

~~~
3pt14159
What I've learned over the years is that the lines _always_ get tapped. The
just do. Whether it's the telegraph, the telephone, or fiberoptic cables under
the sea. The lines get tapped if at all possible.

I don't believe for one second that the CCP doesn't leverage Chinese made
networking gear for intelligence. They probably even leverage third party gear
too. This stuff is all so insecure everyone is in everything anyway.

------
cambalache
No matter what the future may bring for TikTok, it has surprised me because it
definitely showed that the Chinese are coming with their unicorns and coming
hard. I was expecting something like that but in a decade or so. You can argue
that is not that technically advanced and slightly derivative, but its
explosive growth, smart user engagement tactics, polished presentation (a
constant weak point with Chinese products) is nothing short of amazing.

~~~
capableweb
Name one US unicorn that is not "not that technically advanced and slightly
derivative". Basically all the work developers are doing nowadays is in one or
another building on the shoulders of giants ("slightly derivative")

~~~
cambalache
SpaceX. In any case there is nothing wrong with being "slightly derivative",
especially since the concept is really vague, but there are still degrees. So
I would argue that what SpaceX, Tesla or DeepMind(Google) are doing is more
difficult and challenging comparing to what tik-tok, twitter or instagram do.
Even if you claim all work is derivative.

------
KaoruAoiShiho
Way undervalued. One chart to explain why the US is doing this:

[https://imgur.com/a/PnmijVz](https://imgur.com/a/PnmijVz)

~~~
scott31
Your graph does not tell anything about absolute values. My shitty app has
grown 400% in that timeframe, by your metric it should be values at least 200$
billion?

~~~
KaoruAoiShiho
Disingenuous silliness to compare TikTok to a "shitty app". I googled and
found this page (not sure how correct it is).
[https://wallaroomedia.com/blog/social-media/tiktok-
statistic...](https://wallaroomedia.com/blog/social-media/tiktok-statistics)

USA 20 Million MAU in 2018, estimated 70 million in 2020?

------
nl
It's a bit amusing to see all the "suffer Snapchat's fate" comments here.

Snapchat has recovered from the low point at the end of 2018 when FB/Insta had
copied the stories feature and all seemed lost. Their traffic is up, stock is
up and revenue is growing quickly again ($1.18B in 2018 -> $1.72B in 2019).

~~~
andreilys
It’s still below its 2017 ipo price and its EBITDA is almost -$1B.

~~~
3FBD4FDE
Snapchat IPO shares were priced at 17$. It's trading at 22.59 as I type this.

~~~
andreilys
Sure it was shopped around at $17 but soared to $27 on it's first day and has
been below that ever since

------
chirau
Contrary to what I am realizing is a common misconception in this thread that
$SNAP is struggling, it is actually doing very well.

~~~
andreilys
It’s still well below the IPO price in 2017, with net loss growing to $326
million, up from $255 million last year and EBITDA of almost -$1 billion.

Perhaps our definitions of doing well are different.

Sure DAU is up, but we all know those metrics are inflated BS and monetization
is all that really matters. It’s been 3 years since IPO and they’re still
making a heavy loss.

~~~
cycrutchfield
IPO price was $17. Current price is almost $23.

------
chvid
If you look at the graphs in this article on the use and explosive popularity
of TikTok you can see that TiKTok currently dwarfs all other social media in
the US market wrt. downloads, time spent in app pr user, user growth.

[https://www.ft.com/content/c6a8b9bc-
dd6d-46a7-b008-825568982...](https://www.ft.com/content/c6a8b9bc-
dd6d-46a7-b008-8255689825e0)

TikTok’s rampant growth strikes wrong note with US

~~~
nomel
Or, if they allegations are true, you could look at this as "rampant growth in
data harvesting".

~~~
justicezyx
That's definitely true.

Chinese corps generally have a much lower standards on privacy. Because they
were subject to lower standards when they started in domestic China.

------
nnm
There is limited eye time. TikTok is on the path to winner-takes-all in the
space it is currently in. I would value it at $300B given its huge potential
that none of its competitors or copiers can have. $50B is low imo -- likely
caused by the political pressure.

~~~
whymauri
What is stopping TikTok from getting flavor-of-the-month'd as teenagers and
young adults move to newer platforms?

Edit: this is a genuine question I do not have an answer for and I'd like to
hear some takes.

~~~
KaoruAoiShiho
As said in some other comments, TikTok does not use a "follow" model, new
content is algorithmically recommended to you. Therefore there is no problem
with the content creators you're following burning out or your follow list
getting stale. For example my highschool friends are no longer that active on
facebook, and in 2020 I'm no longer asking random people to add me to FB,
therefore facebook is now kind of dead to me. My youtube follows like Ryan
Higa etc are burned out, hence youtube is less useful for me. That'll never
happen with TikTok because my follows list is irrelevant. I see pretty much
only fresh faces with content I'm interested in.

~~~
diag
Youtube does a pretty good job of recommending new content though.

~~~
earthboundkid
I feel like YT used to be better at recommending stuff to me. Now it just
sends me more what I've already seen. It seems like it's falling into the "you
just bought a lawnmower. do you want to buy 500 more lawnmowers???"
recommendation engine trap.

------
pbhjpbhj
I wonder if anyone will be able to create a community that's valued as a
community rather than only valued as a medium through which to hawk products.
What might be achieved with new communication systems that are principled and
directed towards humanity instead of private financial profit?

------
neximo64
I think this is extraordinarily cruel & I can see lots on these comments where
people agree but are divided (probably the ones who disagree are from the US)

As someone who grew up outside the US or a western country I don't really see
anything wrong with TikTok. If they do something Facebook or Google or your
runt of the litter tracking script will do it. I am also not brought up in
China or a country involved in this dispute so feel I have a neutral view.

What I see as torturously unfair that this founder made a great startup and
app that people do enjoy to consume. Because it simply isn't from a western
country he must be bought out at some crappy valuation (which he probably
doesnt even want to do) simply because this is the first foreign tech company
to do well in the US that isn't from a western country.

If this happens where TikTok is banned/has to sell, etc. I would feel it
completely reasonable that India, Africa, China, some small Eastern European
country, SE Asia _forces_ a US company to sell down its local operations at a
price they dictate to a local business.

WhatsApp for example should be forced to sell its Indian operations to
Reliance Industries. Don't any of you think that sounds rather unfair to
Facebook?

~~~
qeternity
Bytedance is not some startup launched in the basement by founders living on
ramen noodles. It’s a product of the CCP.

~~~
borg_
citation needed. It's truly amazing how people justify arbitrary claims to fit
their ideological perspectives.

------
ideals
I'm more surprised this is actually moving forward. I thought the usual play
is to delay things for as long as necessary until people lose interest and
find a new target.

If they stalled until the election would there still be interest from
lawmakers on this topic? Or is it topical for the moment because of China and
Covid?

~~~
bigpumpkin
Actually banning it would create some backlash from part of the userbase in an
election year, whereas more regulations would be welcomed by mostly everyone
(such as requiring data/algorithms/engineers to be based in the US).

~~~
dilap
not every1, tho! as a US citizen, I think it's actually a good thing if there
are some popular social networks not under US govt control.

------
jialutu
All of this reminds me of what happened to Toshiba in the 80s:

[https://www.anti-empire.com/today-the-us-is-waging-a-war-
on-...](https://www.anti-empire.com/today-the-us-is-waging-a-war-on-huawei-
in-1987-it-was-japans-toshiba/)

Just goes to show that the US is as much the thug as it has always been.

------
dorafmon
Why this report is 50B while a recent BBG report said 100?

[https://www.bloomberg.com/news/articles/2020-05-20/tiktok-
ow...](https://www.bloomberg.com/news/articles/2020-05-20/tiktok-owner-s-
value-surpasses-100-billion-in-private-markets)

~~~
weston
I believe the article originally posted is referring to TikTok’s valuation as
a standalone product, should it be spun off. Whereas the link you posted is
about the valuation of parent company ByteDance.

------
bigpumpkin
Intuitively, I don't see Zhang Yiming giving up control so easily, like most
founders. Especially considering an election is coming. The US is likely to up
its pressure a lot from its current stance, before a negotiated settlement
could be made.

------
throwaway_pdp09
Putting that figure another way, fifty thousand million dollars.

That would have sounded insane to me last xmas, now a few months on watching
the economy deflate, more so. I guess economists must know more than a mere
programmer like me.

------
yurlungur
If I was the management of bytedance I'd at least hold on until next year. A
deal made today is definitely gonna be a pretty bad one given the tremendous
political pressure.

------
mobilio
But what are their income to calculate PE?

It's easy to see overvaluation there.

------
nl
$50B sounds realistic.

Snapchat is a $33B company, with 30% yearly revenue growth and similar
demographics to TikTok.

TikTok has a lot more active users than Snapchat and is growing much faster.
It's the only non-FB app in the global top 5. That alone makes it an
attractive investment as a hedge.

Take a look at the stats: [https://mediakix.com/blog/top-tik-tok-statistics-
demographic...](https://mediakix.com/blog/top-tik-tok-statistics-
demographics/)

~~~
dangArino
i think snap had higher DAU while tik tok has higher MAU

------
rydre
$50B seems too low for TikTok. It could be atleast as big as Facebook in the
next five years.

$200B min if investors are serious.

~~~
mobilio
OR could follow Snap fate?

~~~
rydre
No, it's going to be bigger. I know most people dont use snap but they use
tiktok.

Everyone young uses tiktok. It's much bigger than snap could have ever hoped.
TikTok is FAANG tier company.

If I were the founder, I'd go the Chinese government and ask them to ban Tesla
and put tariff on Apple in retaliation. Tell the U.S. to play free market like
they claim. Or lost access for it's companies.

TikTok deserves it's success fully. It's very unfair that the U.S. government
is insistent on blocking it. It's not a monopoly. It's not a dirty company.
Virtually all of its "privacy violations" are the same violations done by
Google, Facebook. Break up BigTech instead of hitting a creative startup.

~~~
collegeburner
> Everyone young uses tiktok. It's much bigger than snap could have ever
> hoped.

Interestingly, you'd think that, but it's dead wrong. I'd say about a quarter
of people actually use tick tock, compared to almost all using instagram or
snap chat. There's a "subculture" of people that use it and are massively
active, and most others don't use it at all. This strikes me as a massive
impediment to tick tock's growth in America: it's entirely captured a specific
group but has made essentially no inroads with any other.

> It's not a monopoly.

This is a straw-man; no one is saying it is. People are saying it's a national
security risk.

> Virtually all of its "privacy violations" are the same violations done by
> Google, Facebook.

Well, I'm less sure of what tick tock does with data than either of those, so
maybe better the devil you know? The concern is that at least at least FAANGs
can be sued in a court of competent jurisdiction, whereas tick tock is based
in an autocracy that is deeply opposed to the concept of freedom and means to
make itself the foremost world power by any means necessary.

~~~
levosmetalo
I'd rather have my data used by an "autocracy" on the other side of the ocean
that can't reach me, then by a "democracy" that can get me and make mu life
hell. If that foreign "autocracy" is an enemy of the "democracy", even better,
since they are then less likely to ever share my data.

~~~
collegeburner
> can't reach me

She absolutely can if you are of any interest to her. See this talk by FBI
director Christopher Wray that discusses Chinese influence operations against
Americans: [https://www.c-span.org/video/?473658-1/fbi-director-wray-
chi...](https://www.c-span.org/video/?473658-1/fbi-director-wray-china-worlds-
superpower)

------
dangArino
how can they be worth twice as much as snap with less revenue and less users?

------
wdb
$50B for TikTok sounds a lot. I am wondering how they want to keep TikTok
attractive for the audience. Would it hit a similar fate as Snap?

~~~
snazz
What fate are you referring to with Snapchat? I’m pretty close to the target
audience for both Snapchat and TikTok and nearly everyone I know (edit: close
to my age) uses both.

~~~
14
What is the age group they target? I am not 40 and don’t know a single person
with snap anymore. None of my kids or their friends so is it like 15-25 year
olds or who uses snap now days? Thanks

~~~
creaghpatr
They have more 13-14 yr olds in the US than Facebook or Instagram; that was
announced at their conference a month ago. Almost everyone under the age of 18
I know has it, idk about usage compared to apps like tiktok though.

~~~
wavesounds
Typo: 13-24 yr olds

------
rezeroed
I don't understand the tiktok interest. I installed it some months ago, used
it for a few hours a day for about a week, then stopped, never returned.

~~~
rezeroed
Thanks for the conversation.

