Unless you have been living under a rock for the last couple of years, odds are that you have heard of TikTok. This video-sharing app and streaming service has taken the world by storm and has become increasingly popular with young people.
An entire class of TikTok content creators has emerged from the platform — business-savvy entertainers who make a living making fun, viral, and engaging content.
It’s no surprise that TikTok has experienced explosive growth in the past few years. Since its launch in 2017, TikTok has surpassed over 2 billion global downloads on the Apple and Google Play Store, and there are over 700 million average daily users.
Many investors want to know how they can get in on this action by investing in Tiktok stock. So we put together this comprehensive article on TikTok stock, how much TikTok is worth, and what explains TikTok’s massive success.
Can I Buy TikTok Stock?
Unfortunately, you cannot directly buy TikTok stock. TikTok is privately owned by ByteDance Limited, a Chinese startup firm owned by Sequoia Capital China.
However, recent movements may result in American companies Walmart and Oracle owning a minority stake in U.S. TikTok operations. So there is hope yet that TikTok investors will eventually see it traded on the stock market.
If this ever does happen, you could indirectly invest in TikTok by buying shares in Walmart or Oracle. According to this deal, Walmart will own 7.5% of TikTok, and Oracle will own 12.5%, for a total minority stake of 20%.
This is one roundabout way to “purchase TikTok stock”.
However, the specifics regarding this sale and acquisition have not been hammered out yet, and it is not clear when ownership will change hands.
So for now, you cannot invest in or buy TikTok’s stock either directly or indirectly. We’ll just have to play the long game and wait for TikTok to become publicly traded on the stock market.
Who Owns TikTok?
TikTok has a pretty interesting origin story. Before it was known as TikTok, it was actually called Douyin.
Douyin was originally founded by the privately-held ByteDance in 2017 after switching the name from A.me. Douyin was developed in 200 days and first released in China. The app experienced a seismic growth in popularity among the Chinese population, so the company prepared for an international release.
An international version of Douyin was created and called TikTok and was released in global markets in September 2017. It quickly became one of the most downloaded apps on both the Apple and Google Playstore. In 2020, it was the 1st most downloaded app.
Around the same time, ByteDance spent $1 billion to acquire the Shanghai company Musical.ly, a video platform that lets users create short lip-synced music videos.
TikTok merged with Musical.ly to take advantage of the latter app’s young user base in the U.S. and other countries. By the end of 2018, the company had a presence in 150 markets in over 75 languages.
It is the 7th most downloaded app of the decade, according to CNET. However, TikTok’s incredible success has not been without controversy. TikTok has been banned in numerous countries due to accusations of spreading “immoral” and “dangerous” content.
For example, TikTok has been banned several times in India due to criticism of the Indian government on the platform.
In 2020, then-U.S. President Donald Trump signed executive order 13942 to ban TikTok in the U.S. within 45 days if the parent company ByteDance did not sell the company.
According to President Trump, there was evidence that TikTok was a national security threat and voiced concerns that ByteDance “might take action that threatens to impair the national security of the U.S.
After a series of lawsuits, injunctions, and administrative orders, TikTok agreed to a deal in which U.S. companies Walmart and Oracle would take a minority stake of the company.
However, in February 2021, this tentative deal was indefinitely put on hold by President Joe Biden in an attempt to judge whether any national security threats claimed by the Trump administration warrant banning the platform or forcing it to sell its ownership to U.S. companies.
So currently, the Walmart and Oracle deal is on ice indefinitely, though there might be changes in the future. If the deal does go through, any stock owned by American corporations will go under the name TikTok Global.
ByteDance did announce a tentative IPO for TikTok Global back in December 2020, but they have not confirmed a date and there is no hard news about an IPO. There is a lot of speculation that TikTok Global will host an IPO soon in Hong Kong or Shanghai markets, but there is nothing set in stone yet.
As of now, ownership of TikTok still remains with ByteDance, and shares are not available for the public to buy. If the company does sell shares, then you will be able to indirectly invest in TikTok by buying shares in either Walmart or Oracle.
Maybe one day, we will see a TikTok Global IPO, or at least a highly successful TikTok clone that is publicly traded.
Can I Buy TikTok Stock: TikTok Stock Symbol
TikTok is not a publicly-traded company so it does not have a ticker symbol. It is also unknown what the TikTok stock ticker will be if an IPO for the company ever launches.
Given that many Chinese companies now trade on American stock exchanges, it is not out of the realm of possibility that we might see TikTok shares on them in the future.
The current predicament is frustrating to investors who want in on the ground floor. TikTok is a massively successful company, and it would do incredibly well on the stock market.
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Why Is TikTok so Successful?
TikTok quickly became one of the most popular video streaming apps in the world. How did it manage to grow so quickly? The answer is TikTok’s combination of user features and sophisticated algorithms for generating and finding relevant content.
TikTok videos are so sharable because they are comprised of short five-second to one-minute long clips that can be cut and spliced using the app’s editing tools.
TikTok has a surprisingly advanced set of video editing tools for a free app, which has allowed users to make some extremely creative and technically impressive videos.
You can make cuts for takes, slow videos down, speed things up, add items and other objects to the frame, put filters on the video, and more. If you browse that app for a few minutes, you get a good idea of what kinds of things the video editing tools can do.
Also, several experts have attributed TikTok’s massive success to their impressive AI algorithms. Artificial intelligence algorithms help organize TikTok’s content and are responsible for what people see when they open their profile page and check their feeds.
The AI algorithm combs through terabytes of data to find new and trending videos that would interest the particular user.
The massive amount of user data that these algorithms gather is one reason why Donald Trump claimed that TikTok could be a potential threat to US national security.
Since ByteDance is a private company, it’s hard to get an exact handle on how much it is worth. However, according to experts, TikTok is worth about $50 billion, give or take a few billion. This figure is an estimation based on the estimated value of the company’s assets.
According to many analysts, the most valuable asset that TikTok owns is its algorithms and data set. The machine learning platform identifies a user’s interests and recommends new content to them. These algorithms could be used for all kinds of applications, such as marketing and sales.
Some people speculate that the tech is so valuable that the Chinese government would stop the company from selling it.
While you cannot own a share of TikTok at the moment, there are many social media platforms that can be traded on the stock market.
Can I Buy TikTok Stock: TikTok Stock Competitors to Invest in
Unfortunately, we cannot invest in TikTok at the moment. However, there are a lot of other similar companies you could put your money in.
Tencent (OTCMKTS TCEHY)
The Chinese company Tencent is a tech firm and owner of WeChat (Weixin), another popular app that President Trump tried to ban in the U.S. over national security concerns.
WeChat has over 1 billion worldwide users and is ranked as the 5th largest social media platform by user volume. Analysts estimate that WeChat messaging takes up about 30% of mobile users in China and over one billion payments are processed every day using WeChat Pay.
WeChat Pay connects to a centralized clearing and settlements system that runs out of the People’s Bank of China to allow fast immediate payments between individuals.
Tencent also recently bought a large stake in social media company Instagram, a 40% stake in Epic Games (the creator of Fortnite) as well as a 93% stake in Riot Games (the creators of League of Legends).
Tencent also owns several smaller holdings in mobile and PC gaming companies. Records indicate a 2019 annual revenue of 340 billion yuan (~52 billion USD) and a gross profit of 146 billion yuan (~23 billion USD) the same year.
Tencent is a media giant that is a force to reckon with. So buying some stocks of conglomerate is appealing, as its growth doesn’t seem to be slowing down any time soon.
Twitter (NYSE: TWTR)
Twitter is another major social media player and is one of the most used apps in the world by celebrities, journalists, and more. Currently, it has about 330 million monthly active users. (Even better, it’s publicly traded.)
In fact, Twitter has turned into somewhat of a breaking news website. Highly respected journalists have broker findings using Twitter and many people claim that they get news and discussion from the app.
As of 2020, Twitter had over 330 million monthly active users, and over 500 million tweets are made every day (6,000 per second).
Twitter has recently been on rocky times, especially as social media companies continue to come under criticism in the U.S. for their role in spreading misinformation and hate speech. Twitter operated on a net loss of $1 billion last year but manages to generate decent cash flow. As of 2020, they have around $7.5 billion in cash and short-term investments.
Twitter has experienced rocky times recently but its performance still remains strong for investors who are interested in social media platforms.
Facebook is the single largest social media platform in the world and has over 2 billion global users as of July 2020.
Facebook also owns encrypted messenger WhatsApp, which also hit the 2 billion user mark in July 2020. Unlike many other social media companies, Facebook actually generates ludicrous amounts of money.
They reported over $60 billion in cash reserves as of Q4 2020 and a quarterly cash flow of d$3.877 billion during the same period. The company continues to expand and acquire new platforms and user bases, adding to the media empire.
Despite the, quite frankly, ridiculous performance of the company, Facebook has been in trouble too many times to count in recent years.
Allegations of breaking antitrust laws and accusations that the platform contributes to political violence and propaganda have all caused it to come under severe public scrutiny. No matter how much people love Facebook’s products, it appears that the dark cloud of controversy will forever loom over the platform.
Several politicians have advocated breaking up large social media corporations such as Facebook or Twitter, though no serious movement has gained traction yet.
Either way, Facebook’s stocks are available for trading if you are interested.
Is Investing in Social Media a Good Idea?
Investing in social media is a tricky business. Most social media companies operate at a net loss, though there are some exceptions — looking at you Facebook and Tencent.
Most social media companies do not pay dividends either, so inventors tend to dislike even the cash-bloated Facebook stock.
One of the main problems with social media companies is that most of their revenue relies on advertising from their partners. However, this trend is starting to change as more social media companies branch out to offer other kinds of paid services.
The introduction of these kinds of revenue-generating schemes for social media companies could be a good sign for investors in the future.
Investing in social media is also risky due to the current political climate surrounding social media companies. Changes in legislation and company liability policies could greatly affect how social media companies develop in the next 5–10 years.
Can I Buy TikTok Stock: Final Words
To summarize: unfortunately, no, you cannot buy TikTok stock. The privately-held Chinese Company ByteDance owns TikTok.
There could be a potential IPO for TikTok Global sometime in the near future, so you might be able to buy shares of TikTok Global in the near future.
You also may be able to indirectly invest in TikTok through Walmart or Oracle if their pending deal with ByteDance ever goes through. In the meantime though, you will have to make due investing in other social media companies.
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