TikTok is taking the world by storm. With its short-form videos, content creators use the platform to post anything from viral dance videos to personal finance tips.
With more than one billion monthly users, it has become impossible to write TikTok off or dismiss it as a fad. Given the mass appeal of TikTok, you might wonder whether it’s possible to invest in the app.
Investing in a successful app like TikTok might be a simpler way to capitalize on its success than spending many hours creating content. However, TikTok is owned by its parent company, ByteDance, which is not yet publicly traded. In fact, the tech giant disbanded its investment arm in early 2022.
Let’s cover what we know about TikTok and ByteDance and whether investing in TikTok could be possible now or in the future.
|Company name||ByteDance Ltd. (Parent company of TikTok)|
|Industry||Media and video sharing|
|Ticker symbol||Doesn’t exist yet|
|Expected IPO date||End of 2022 or later|
TikTok is a popular video-sharing app where users create and share videos up to 10 minutes long. While many users engage with the platform via its smartphone apps on iOS and Android, it is also possible to access TikTok via a web browser.
TikTok’s parent company, ByteDance Ltd., is a Chinese company founded in 2012 by Zhang Yiming. ByteDance is based in Beijing, China, though the company has offices in major cities worldwide, including New York, Los Angeles, Sydney, Mumbai, Paris, and Berlin.
TikTok enters the picture
ByteDance launched TikTok in China under the name Douyin in 2016 before launching it internationally in 2017 using the TikTok name. In August 2018, TikTok merged with Musical.ly and entered the U.S. market.
TikTok users rapidly increased in number, reaching more than 3.5 billion downloads by early 2021. In late 2021, Yiming stepped down as the chairman of ByteDance, passing his role to Liang Rubo, who now serves as both the chairman and CEO.
In addition to TikTok, ByteDance has other products, such as Lark, a communication and collaboration platform. It also owns Xigua Video, a Chinese video-sharing platform comparable to YouTube.
Why do people want to invest in TikTok?
Neither TikTok nor ByteDance is publicly traded right now, meaning that investing money directly in TikTok or ByteDance isn’t possible yet. Nevertheless, there is no shortage of reasons to desire this type of investment.
TikTok is engaging
The way the app is designed could keep users scrolling for extended periods. The BBC reported in 2020 that TikTok has an “extraordinarily powerful algorithm, which learns what content users like to see far faster than many other apps.”
This algorithm has helped TikTok grow at an eye-popping rate. In addition to its one billion active monthly users, it was the most-downloaded app in 2021, with 656 million downloads. Eight new users join TikTok every second, HootSuite reported in 2022.
TikTok aims to improve
One of the biggest criticisms of TikTok has been how it handles user data. For instance, it has been accused of harvesting user data and storing it in China without user consent. In April 2022, TikTok announced a strategy to locally store its European users’ data. TikTok plans to begin implementing the strategy in early 2023.
TikTok also announced a new initiative to protect its younger users in February 2022. That initiative includes a page that advises younger users to avoid distressing content or harmful challenges. This comes in the wake of the tragic deaths of some of its younger users while attempting TikTok challenges.
ByteDance has a firm valuation
ByteDance, TikTok’s parent company, is a private company and doesn’t have a proven market value. But it was reportedly worth $400 billion as of October 2021, according to anonymous private equity trades that were shared online.
ByteDance has had 12 rounds of funding, totaling $9.4 billion. One of the more prominent investors is SoftBank, but ByteDance also secured financing from a syndicate of 12 other banks. This syndicate includes major banks such as Morgan Stanley and Goldman Sachs.
3 reasons to invest in TikTok
There are several reasons why investing in TikTok might be worth your time and money, including:
1. Achieved growth
TikTok’s staggering user growth rate is one of the biggest reasons it might be a good investment if it eventually goes public. After all, TikTok is the fastest-growing social media platform of 2022.
TikTok may also continue to grow and become more widely adopted in the professional world. Meltwater, a media monitoring service, released a survey of 3,000 professionals who work in social media and marketing. 40% said they intended to use TikTok as part of their social media strategy in 2022. That compares to 32% for Instagram, 29% for YouTube, and 28% for LinkedIn.
2. Expanding popularity
It could be challenging to understand what makes TikTok so successful. A report by Forbes asked the opinions of several experts, which boiled down to people’s love of music and how TikTok lends itself well to viral trends. The platform encourages communal participation, which helps it continue to grow in popularity.
Not only has TikTok grown swiftly, but it has also expanded to over 150 markets around the world. According to data from Cloudflare, it has even surpassed Google as the most visited website in the world in 2021.
3. Potential future
While TikTok has over one billion monthly active users, it may still have room to grow. Both Facebook — now named Meta — and YouTube are estimated to have more than twice as many active users as TikTok.
TikTok tends to appeal to younger users, which bodes well for the future. Nearly one-third of TikTok’s users are estimated to be under the age of 20, and more than 60% are under 30.
3 reasons to avoid investing in TikTok
Although TikTok’s growth is reminiscent of Facebook in its early days, it hasn’t been all smooth sailing for the platform and its parent company, ByteDance.
1. Bans and restrictions
Several countries have banned or attempted to ban TikTok, including China, which doesn’t let people download the app. People in China still have access to Douyin, but they can’t access TikTok content using the Chinese counterpart.
China is far from the only country that has made moves to keep people away from TikTok. In June 2020, TikTok was banned in India, the world’s second-largest country by population. In August 2020, U.S. President Donald Trump attempted to ban TikTok. However, that ban was later averted in a deal that the president approved.
2. Growing competition
Other risks include potential TikTok competitors. While TikTok videos mostly dominated the short-form sharing space throughout the pandemic in 2020 and 2021, many competitors vied to take over some of its market share.
These competitors might have been successful to some degree. In March 2020, TikTok’s market share by the number of downloads reached 88%. However, the share dropped to 56% by August 2020. While some of that drop might be attributed to bans, competitors are likely to continue working on attracting the TikTok global user base.
Instagram, for example, said it would “double down” on its competition with TikTok by promoting video content in its reel format. Snapchat, another competitor, continues to improve its video format known as snaps to appeal to some of TikTok’s user base.
3. Privacy and safety risks
TikTok also faces concerns related to the privacy and safety of its users. Backlashes against potential misuse of its user data and dangerous challenges that may go viral on the platform could negatively impact its future. Addressing these concerns could be key to the company’s long-term success.
When to expect a TikTok IPO
Various rumors have circulated about a possible ByteDance initial public offering (IPO), which is when a company becomes publicly traded on the stock market.
However, there is no date for this possible IPO as of June 2022. IPO talks have been pushed back amid regulatory uncertainties in China.
While ByteDance could be valued at $400 billion or more, its share price is not yet known since it’s not a publicly traded company. A report in October 2021 revealed an equity buyback from an employee stock ownership plan (ESOP) at a stock price of $132.
However, the report notes that this would value the company at under $200 billion — far less than recent estimates of the company’s value. That’s why it’s essential to take these evaluations with a grain of salt since they often come with disclaimers of not knowing the real value of a privately held company.
How to buy TikTok stock
Knowing how to invest in stocks such as TikTok stock may not be obvious at first. TikTok is owned by ByteDance, which is not publicly traded. So, it isn’t possible to buy shares of TikTok or ByteDance unless the company goes public.
Invest in TikTok partners
Some publicly traded companies have invested in ByteDance, so an indirect investment is possible.
One of ByteDance’s major investors is SoftBank (SFTBY), a publicly traded Japanese bank based in Tokyo. Kohlberg Kravis Roberts (KKR) is a private equity company based in New York that is also publicly traded and has invested in ByteDance.
You could invest in either of these companies using one of the best brokerage accounts. You could also invest in ByteDance itself when it goes public, using the same account.
Utilize a pre-IPO platform
Some pre-IPO trading platforms may let you trade the equities of ByteDance ahead of its IPO. One such platform is EquityZen, which offers several ways to invest in pre-IPO equities.
Such platforms might not currently offer pre-IPO access to TikTok or ByteDance since the company faces regulatory uncertainty in China. However, this opportunity might become accessible in the future if ByteDance manages to push through with its IPO plans.
Read our EquityZen review.
FAQs about investing in TikTok
Does TikTok have a stock symbol?
As of June 2022, TikTok does not have a stock symbol, as the parent company, ByteDance, is not publicly traded.
Can you invest in ByteDance?
ByteDance, the parent company of TikTok, is privately held as of June 2022. As a result, it is not possible to invest directly in ByteDance unless the company confirms an IPO in the future.
Who invested in ByteDance?
ByteDance’s largest investors include Sequoia Capital, Kohlberg Kravis Roberts, Tiger Global Management, and SoftBank.
TikTok is one of the fastest-growing apps globally, touting one billion monthly active users and billions of downloads. Its parent company, ByteDance, had several valuations that claimed a value of as much as $400 billion, but since it isn’t publicly traded, no market value is confirmed.
Until ByteDance announces an IPO, investing in TikTok could be done indirectly by investing in one of ByteDance’s backers or via a pre-IPO investment platform. Explore our list of the best investment apps or learn how to become an accredited investor to get access to exclusive investment opportunities.
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