TikTok, the social media app known for its short-form, lip-sync videos, has become one of the most popular platforms globally, especially among younger generations. Its popularity has led investors to wonder about its potential initial public offering (IPO) in 2023.
Will TikTok IPO in 2023?
This is the question that every tech investor is asking.
In this article, we will explore TikTok’s ownership, its valuation, and the potential for a blockbuster IPO in 2023.
TikTok is owned by the Chinese company ByteDance and was launched in 2016 as Douyin in China. The app was later introduced as TikTok in other countries and quickly gained a massive following.
As of December 2021, TikTok had 1.2 billion monthly active users (MUA), making it one of the most popular social media platforms globally. In fact, in the USA alone, it is projected that more than 100 million people – or nearly one out of every three inhabitants – will use TikTok at least once a month by 2024.
TikTok’s growth is meteoric and it is expected to continue in the coming years.
The crazy thing is that its growth is far from over: it is believed that for all of 2022, close to 1.5 billion people used TikTok at least once a month.
Will TikTok break the 2 billion MUA mark in 2023?
The app is available in over 150 countries, including the United States, the United Kingdom, India, and Australia. In developing nations, millions of people will gain access to the internet in the coming years. Therefore, it is very likely that TikTok will continue growing.
TikTok is no regular company.
Since its rise to prominence in 2020, it has been the subject of controversy and political scrutiny.
In the United States, there were concerns about its ties to the Chinese government and the security of user data. These concerns even led the Trump Administration to attempt to ban the app in the country.
US President Donald Trump tried to ban TikTok over privacy concerns.
However, the ban was eventually lifted by the Biden Administration after ByteDance agreed to transfer the operations of TikTok in the United States to a new American-led company, TikTok Global. As part of this transfer, Bytedance also transferred US users' data to the Oracle cloud and made it available only to its American staff.
The transfer of TikTok's operations to the United States was a significant development for the company.
It allowed Bytedance to continue operating the app in one of its largest markets. However, the transfer also raises questions about the future of TikTok and the potential for an IPO in 2023.
An IPO would allow a company to raise capital by selling shares to the public. TikTok's massive popularity could make it one of the largest IPOs ever. An IPO would also give the company access to a new source of funding, which could be used for future growth and expansion.
However, there are also several challenges that TikTok would need to overcome before an IPO can occur.
Privacy Concerns…
One of the biggest challenges is the ongoing scrutiny from governments and regulators. TikTok's ties to the Chinese government, along with concerns about user data security, could lead to regulatory hurdles that could delay or even prevent an IPO from occurring.
This is arguably the biggest obstacle preventing a TikTok IPO.
...And Questions About the Financials
Another factor that will impact TikTok's potential IPO is its financial performance.
TikTok is a private company, so its financial information is not publicly available.
However, it is widely reported that TikTok generated nearly $12 billion of revenue in 2022, triple the $3.88 billion earned in 2021. In fact, TikTok is expected to break the $20 billion revenue mark next year.
While these figures are impressive, TikTok does not report its full financials. Therefore, it is not clear whether the company is generating profits or losing money.
TikTok would need to demonstrate its financial viability to investors before an IPO could occur.
In September 2022, Bytedance offered to buy back $3 billion of its own stock from investors at a staggering $300 billion valuation, a sharp decrease from its peak of $400 billion in 2021.
Similarly, TikTok’s valuation as a standalone business has declined over the past year: it is rumored the company is worth anywhere between $50-$60 billion, depending on market conditions and its profitability.
TikTok Global is one of the world’s most valuable startups.
Despite this downturn, the company remains one of the most valuable startups in the world.
An IPO would generate considerable interest and push up the price of the offering even more.
While TikTok's massive popularity has many speculating that a potential IPO will happen in 2023, there are still several challenges that the company must overcome, include ongoing government scrutiny, regulatory hurdles, and the need to demonstrate financial viability.
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The information in this article is well-researched and factual. Still, it contains opinions also, and IT IS NOT FINANCIAL ADVICE and should not be interpreted as such, do not make any financial decisions based on the information in this article; we are not financial advisors. We are journalists. You should always consult with a professional before making any investment decisions
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