TikTok’s US operations could be worth as much as $US50 billion if ByteDance decides to sell

Business moguls such as Elon Musk should be prepared to spend tens of billions of dollars for TikTok’s US operations should parent company ByteDance decide to sell.

TikTok is staring at a potential ban in the US if the Supreme Court decides to uphold a national security law in which service providers such as Apple and Google would be penalised for hosting the app after the Sunday deadline.

ByteDance has not indicated that it will sell the app’s US unit, but the Chinese government has considered a plan in which X owner Elon Musk would acquire the operations, as part of several scenarios in consideration, Bloomberg News reported Monday.

If ByteDance decides to sell, potential buyers may have to spend between $US40 billion ($64.4b) and $US50 billion ($80.6b). That’s the valuation that CFRA Research Senior Vice President Angelo Zino has estimated for TikTok’s US operations. He based his valuation on estimates of TikTok’s US user base and revenue in comparison to rival apps.

TikTok has about 115 million monthly mobile users in the US, which is slightly behind Instagram’s 131 million, according to an estimate by market intelligence firm Sensor Tower. That puts TikTok ahead of Snapchat, Pinterest and Reddit, which have U.S. monthly mobile user bases of 96 million, 74 million and 32 million, according to Sensor Tower.

Mr Zino’s estimate, however, is down from the more than $US60b ($96.7b) that he estimated for the unit in March 2024, when the House passed the initial national security bill that President Joe Biden signed into law the following month.

The lowered estimate is due to TikTok’s current geopolitical predicament and because “industry multiples have come in a bit” since March, Zino told CNBC in an email.

His estimate doesn’t include TikTok’s valuable recommendation algorithms, which a US acquirer would not obtain as part of a deal, with the algorithms and their alleged ties to China being central to the US government’s case that TikTok poses a national security threat.

Analysts at Bloomberg Intelligence have their estimate for TikTok’s US operations pegged in the range of $US30b ($48.3b) to $US35b ($56.4b)

That’s the estimate they published in July, saying at the time that the value of the unit would be “discounted due to it being a forced sale.”

Bloomberg Intelligence analysts noted that finding a buyer for TikTok’s U.S. operations that can both afford the transaction and deal with the accompanying regulatory scrutiny on data privacy makes a sale challenging. It could also make it difficult for a buyer to expand TikTok’s ads business, they wrote.

A consortium of businesspeople including billionaire Frank McCourt and O’Leary Ventures Chairman Kevin O’Leary put in a bid to buy TikTok from ByteDance. O’Leary has previously said the group would be willing to pay up to $US20 billion to acquire the US assets without the algorithm.

Unlike a Musk bid, O’Leary’s group’s bid would be free from regulatory scrutiny, O’Leary said in a Monday interview with Fox News.

Mr O’Leary said that he’s “a huge Elon Musk fan,” but added “the idea that the regulator, even under Trump’s administration, would allow this is pretty slim.”

TikTok, X and O’Leary Ventures did not respond to requests for comment.