Money

Why can’t I invest in Tik Tok?

Published

12 hours ago

September 19, 2024

TikTok has become one of the most popular and valuable social media platforms globally owned by the Chinese tech giant Bytedance. TikTok is estimated to be worth around $100 billion as of 2023 and contributes significantly to the value of Bytedance at over $220 billion.

Despite its growing value and influence, TikTok is not directly accessible for individual investors yet.

Why can’t you directly invest in TikTok?

You can’t invest directly in TikTok because it is a privately held company owned by ByteDance. Since ByteDance hasn’t gone public, there’s no TikTok stock available on exchanges like the NYSE or NASDAQ. ByteDance, based in China, remains privately owned and controls TikTok globally, meaning its shares are not publicly traded.

For now, TikTok remains part of ByteDance’s privately held portfolio. Until ByteDance goes public or spins off TikTok as its own publicly traded company, direct investments are off the table. But there are still ways to gain exposure to TikTok’s success.

How to indirectly invest in TikTok

There are ways to indirectly invest in TikTok through 2 prominent global investment firms, KKR and SoftBank which hold significant stakes in ByteDance. These firms are publicly traded, giving investors the opportunity to gain exposure to ByteDance—and by extension, TikTok—through their shares.

KKR – Kohlberg Kravis Roberts, a Global investment firms which has invested in ByteDance. By purchasing KKR stock (NYSE: KKR), investors can benefit from ByteDance’s future profitability.
Soft Bank – a global investment powerhouse with a history of investing in high-growth tech companies including ByteDance.

Both of these firms are publicly listed meaning you can buy their shares through most brokerage platforms.

What happens if Tik Tok is banned in the US?

A major development looming over TikTok is the U.S. government’s mandate that ByteDance divests its ownership of the app by January 2025. If ByteDance doesn’t sell TikTok to a U.S.-based or approved company, TikTok could face a ban in the U.S. This would mean it could no longer be offered in U.S. app stores, and internet service providers might block access to the platform entirely.

If TikTok is sold to a public company before the deadline, this could create a significant opportunity for investors. Should a public U.S. company acquire TikTok, investors may have the chance to buy shares in the acquirer and gain direct exposure to TikTok’s business. While the situation remains fluid, investors should keep an eye on developments regarding the potential sale of TikTok.

Tik Tok Employees

TikTok has over 7000 employees just in the US. Employees have been granted company stock as part of a compensation package.

In certain cases, these employees are given the opportunity to sell their shares during private equity deals or funding rounds, potentially generating significant returns.

For employees, this can be a lucrative opportunity, especially as ByteDance continues to grow in value. However, for outside investors, the options remain limited to indirect investments until a broader IPO or sale occurs.

Other Social Media stocks to consider

Pinterest is a growing visual discovery platform that continues to expand its user base. With its strong e-commerce integration and growing advertising revenue, Pinterest is a solid option for those looking to invest in the social media sector. It provides a different user experience compared to TikTok, but its monetization strategies make it a viable growth stock.
Meta Platforms is another tech giant that owns Facebook, Instagram, and WhatsApp. Meta is a leader in social media, and its dominance in the digital advertising space makes it a strong option for long-term investors. Instagram, in particular, is one of TikTok’s main competitors, as it continues to innovate with features like Reels to capture more of the short-form video market. Meta’s diversified platform provides multiple revenue streams, making it a safer option for investors compared to newer, niche apps.

Both Pinterest and Meta offer strong potential for growth and are already publicly traded, giving investors easy access to social media stocks.

Keep an eye on TikTok’s future

As an investor it could pay to keep an eye on the future of TikTok as the 2025 deadline for a U.S. sale of TikTok approaches, there could be new investment opportunities. For now, indirect investing and exploring other social media stocks provide viable strategies to tap into the sector’s growth.

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