How much would billionaire Elon Musk have to spend to buy TikTok?

Tech billionaires like Elon Musk may need to prepare tens of billions of dollars if ByteDance decides to sell TikTok's US operations.

TikTok is currently facing the risk of being banned in the US, depending on the Supreme Court's decision regarding national security laws. Accordingly, service providers like Apple and Google could face penalties if they continue to host the app after the January 19th deadline.

Although ByteDance has not made an official statement about selling its TikTok US operations, Bloomberg News revealed that the Chinese government has considered a scenario in which Elon Musk, owner of the social media platform X, could acquire the US operations. This is just one of several options being considered.

If ByteDance decides to sell, potential investors could have to shell out between $40 and $50 billion to acquire TikTok's US operations. This figure was estimated by Angelo Zino, Senior Vice President of CFRA Research, based on TikTok's US user base and revenue compared to competing apps.

Currently, TikTok has approximately 115 million monthly mobile users in the US, second only to Instagram with 131 million users, according to data from US market research firm Sensor Tower. However, TikTok still far surpasses Snapchat, Pinterest, and Reddit, which have 96 million, 74 million, and 32 million monthly users respectively.

Notably, Zino's current estimate is lower than the more than $60 billion he projected in March 2024, when the House of Representatives passed the first national security bill, which was subsequently signed into law by President Joe Biden the following month. This discrepancy reflects the volatility in TikTok's legal landscape and market value.

According to Angelo Zino, the lower valuation for TikTok reflects the app's current geopolitical situation and changes since March. In an email to CNBC, Zino explained that his estimate does not include TikTok's proprietary recommendation algorithms, a key element that the US buyer would not own under the deal.

These algorithms, along with the alleged links to China, are central to the U.S. government's argument that TikTok is a national security threat.

Meanwhile, analysts at Bloomberg Intelligence offered a lower estimate, suggesting TikTok's US operations are worth between $30 and $35 billion. This assessment, published in July 2024, noted that the valuation was significantly reduced because it would be a "forced sale."

Bloomberg Intelligence also pointed out the significant challenges in finding a potential buyer. They emphasized that the buyer needs not only the financial capacity to complete the transaction but also the ability to meet stringent regulatory requirements, particularly regarding data privacy. These barriers could hinder TikTok's ability to expand its advertising operations after the acquisition.

A group of entrepreneurs, including billionaire Frank McCourt and O'Leary Ventures Chairman Kevin O'Leary, has made an offer to acquire TikTok from ByteDance. O'Leary previously revealed that his group was willing to spend up to $20 billion to own TikTok's US operations without including the app's recommendation algorithms.

In an interview with Fox News on January 13th, O'Leary emphasized that, unlike Elon Musk's proposal, his team's proposal would not face scrutiny from regulatory agencies.

Although he claimed to be "a big fan of Elon Musk," O'Leary also frankly stated that "the likelihood of regulators, even under the Trump administration, approving this deal is very low."

Currently, TikTok, X, and O'Leary Ventures have not responded to requests for comment from the press.