InvestorQ : Has Trump managed to find a solution to the Tik Tok riddle in the US?
diksha shah made post

Has Trump managed to find a solution to the Tik Tok riddle in the US?

Rashi Mehra answered.
2 years ago

Remember, any solution for the Tik Tok imbroglio needs the consent of four players; the US government, the Chinese government, Bytedance and the eventual buyer. Unless they are in sync, the deal will be extremely tough to happen.

As of Friday, it does look like there could finally be an acceptable model for the Tik Tok US operations. The proposed model envisages the right to buy 12.5% stake to Oracle and 7.5% to Wal-Mart. Bytedance will have the remaining 80% in Tik Tok Global and Trump is OK.

The American operations of Tik Tok will be housed in the company, Tik Tok Global. While the actual valuation of Tik Tok Global is yet to be finalised, there are indications that Bytedance could expect an overall valuation of $60 billion for Tik Tok Global as a whole.

Effectively, Oracle and Wal-Mart will have to shell out close to $12 billion between them for their combined 20% stake in Tik Tok Global. That is nearly double the valuation for Tik Tok Global that analysts were pegging, considering its 100 million user base in the US.

At this point, Bytedance has only given a value indication but Oracle and Wal-Mart are yet to accept these valuations. But, the bigger challenge is getting the buy-in of the Chinese government for this deal and the status of the algorithm post the deal.