Who will buy TikTok? (if it were to be force-sold)

TikTok – the go-to app for US millennials, and the go-to topic for US lawmakers.

The US’ love-hate relationship with TikTok continues with its latest Congressional Hearing, which took over the internet.

As millennials thirst over TikTok CEO Shou Zi Chew, my curiosity for the worst possible outcome unraveled.

If ByteDance were to be forced to sell TikTok, who and which company has the resources to buy over the most valuable social media company?

What is TikTok’s worth and value?

Now to be clear, under the worst case for ByteDance, only TikTok will be divested. ByteDance will still be holding on to Douyin.

So, how much is TikTok worth?

Since it’s not a listed company and has remained generally secretive on its financials, there are no straightforward answers.

But, we can still try and do some simple calculations.

Based on an estimated digital ad revenue breakdown obtained from Statista, TikTok generates around 37% of ByteDance’s total revenue.

So how much is ByteDance worth?

According to the latest valuation, ByteDance is valued at USD 220 billion.

So, by doing some simple mathematics and assumption, TikTok should be worth around USD 81.4 billion, a little under half of ByteDance’s total worth.

Who has the financial firepower AND reasons to buy TikTok?

Any company can suddenly have enough financial firepower if they undergo debt or securities financing.

To make things simple, we are just going to focus on companies with sufficient cash on hand to buy TikTok, should it become available for sale.

And since there are plenty of companies from various sectors that do hold significant cash, we are just going to narrow down the possible candidates to those within the cloud or tech space.

So cash-rich companies within the cloud or tech space.

You can find the exhaustive list of cash-rich companies here.

Alphabet Inc. (NASDAQ: GOOGL)

Buying TikTok will make Alphabet Inc. the king of user-generated content. With both YouTube and TikTok, Alphabet Inc. would have easily solved the concern of the younger generation gyrating toward short-form videos.

With the latest cash position of USD 114 billion, it shouldn’t be financially taxing for the company at all.

Microsoft Corp (NASDAQ: MSFT)

Buying TikTok will further strengthen Microsoft’s presence in the social media and advertising business. LinkedIn was a surprise success that convinced professional key opinion leaders to subscribe for better reach and also boost job and talent hunting.

Boasting a cash position of USD 99.5 billion, Microsoft is able to buy TikTok and still be left with spare cash. But do note that they would still need some cash to finance the pending Activision Blizzard (NASDAQ: ATVI) acquisition, valued at USD 69 billion.

Amazon.com, Inc. (NASDAQ: AMZN)

Amazon.com is another company that would secretly yearn to own TikTok. There are synergies for AWS to cater to whatever services and content delivery network for the tons of user-generated content by TikTok creators and users.

Amazon might still need to cough up an additional USD 12 billion to buy TikTok as it currently only has USD 70 billion on hand.

Special mention: Meta Platforms Inc (NASDAQ: META)

If Meta miraculously purchases TikTok, it would have solved the execs’ problems overnight. Meta’s host of platforms has been fiercely disrupted by TikTok and has resulted in playing catch-up by copying TikTok with the launch of short videos and Instagram Reels.

However, do note that Meta only has USD 40.73 billion on hand. If TikTok goes on sale for USD 81.4 billion, Meta has to take on debt or undergo equity financing to end its nightmare.

Not mentioned: Oracle Corporation (NYSE: ORCL)

The company entrusted by TikTok to keep TikTok’s US data safe on US soil under Project Texas. Although it seems that Oracle already has one hand on TikTok, it simply does not have enough cash to own TikTok entirely.

Wild card: Elon Musk

Never, ever not consider this probability. Elon already owns Twitter and is a self-professed lover of the app. Elon might not be crazy about TikTok, but I would still consider him a wild card.

But Tesla shareholders should expect more selling pressure if this occurs. Elon Musk would have to unload more Tesla shares to fund a potential TikTok acquisition.

The death of freedom and capitalism?

It might seem exciting to fathom the potential sale of TikTok to either one of Big Tech. TikTok is the current crown jewel of social media. And it still has ample growth runway and can put serious damage to other big tech competitors.

However, events like this are definitely a step backward for fair play and the spirit of innovation.

If the US ends up either forcing a sale of TikTok or totally banning TikTok, this does spell death to the values that the US hold so dearly ever since its founding – freedom and capitalism.

Acquiring TikTok with or without additional financing is not the only hurdle.

Whichever companies that try to buy TikTok even if it is sanctioned, would face the steep challenge of convincing the antitrust watchdogs.

This gets tougher for social media companies.

My thoughts and wishes? TikTok to remain as a ByteDance subsidiary. Competition is what drives companies to innovate, improve, and break through.

And these are the basic fundamentals for big tech companies to not only survive the steep competition but to also stay relevant for the next 10, 20 years.