Billionaire Shark Tank judge wants to buy TikTok at up to 90% discount, explains why
Upstox
2 min read • Updated: March 26, 2024, 11:50 AM
Summary
Canadian businessman Kevin O’Leary said he would start bidding for TikTok from $20 to $30 billion, which would mark a discount of up to 90% as compared to the last market valuation of $220 billion. The valuation cut is justified as the preference-based algorithm – considered as the key behind the short video-sharing platform’s success worldwide – would not be transferred to the potential buyer.
Canadian billionaire and Shark Tank US judge, Kevin O’Leary wants to buy social media sensation TikTok at a discount of up to 90% as against its current market price. The reason, he said, is that the app would be sold under regulatory pressure without the transfer of the algorithm that keeps users hooked.
TikTok, in its last funding round in 2023, was valued at $220 billion. O’Leary, while speaking to a news channel, said he would start bidding from $20 to $30 billion, which would mark a discount of up to 90% as compared to the last market valuation.
The potential buyer will have to transform “TikTok China into TikTok USA” as the preference-based algorithm – considered as the key behind the short video-sharing platform’s success worldwide – would not be transferred, he pointed out.
“So what you’re getting is the valuable domestic brand TikTok and 170 million users, with no data,” he told CNBC on March 23. The valuation cut is justified as the potential buyer would have to “re-emulate” the algorithm with US code, added O’Leary, who heads venture capital investment firm O’Leary Ventures.
On March 13, the US House of Representatives passed a legislation that requires TikTok’s owner ByteDance, an entity based in China, to divest its ownership. If the company fails to transfer the controlling stake to a US-based company, it will be booted out of the app stores available for American users.
The legislation was passed as the US lawmakers argue that ByteDance collects sensitive user information through its “addictive algorithm”, and the same could be misused by the Chinese Communist Party. The bill is yet to be passed in the US Senate, before being signed as a law by President Joe Biden.
It is yet to be determined whether the Chinese government will allow ByteDance to sell its stake to a US-based entity. There is a 50% chance of either a ban or a forced sale of TikTok by early next year, following the conclusion of the US presidential elections, O’Leary said.