Some investors of TikTok’s parent company ByteDance seeking to take over the popular social media app are valuing it at about $50 billion, significantly more than peers such as Snap, Reuters reported.
Beijing-based ByteDance is considering a range of options for TikTok amid pressure from the United States to relinquish control of the app, which allows users to create short videos with special effects and has become wildly popular with U.S. teenagers.
The Committee on Foreign Investment in the United States (CFIUS), a U.S. government panel which reviews deals by foreign acquirers for potential national security risks, has raised concerns about the safety of the personal data that TikTok handles under its Chinese owner, Reuters reported previously.
Privately held ByteDance has received a proposal from some of its investors, including Sequoia and General Atlantic, to transfer majority ownership of TikTok to them. It has also fielded acquisition interest in TikTok from other companies and investment firms.
The investors’ bid values TikTok at 50 times its projected 2020 revenue of about $1 billion. By comparison, Snap is valued at 15 times its projected 2020 revenue, at about $33 billion, according to data provider Refinitiv.
It is unclear whether ByteDance’s founder and CEO, Yiming Zhang, will be satisfied with the offer. ByteDance executives recently discussed valuation projections for TikTok that exceed $50 billion.
TikTok is growing rapidly as it rakes in more cash from advertising, and its management team expects to achieve $6 billion in revenue in 2021. ByteDance, which owns other apps including TikTok’s Chinese counterpart, Douyin, has set itself a revenue target for 2020 of about 200 billion yuan ($28 billion), Reuters reported previously.
ByteDance was valued at as much as $140 billion earlier this year when one of its shareholders, Cheetah Mobile, sold a small stake in a private deal.
Last week, the U.S. Senate Committee on Homeland Security and Governmental Affairs unanimously passed a bill that would bar U.S. federal employees from using TikTok on government-issued devices. It will be taken up by the full Senate for a vote. The House of Representatives has already voted for a similar measure.
ByteDance acquired Shanghai-based video app Musical.ly app in a $1 billion deal in 2017 and relaunched it as TikTok the following year. About 70 percent of the equity capital ByteDance has raised from outside investors has come from the United States.