How much would billionaire Elon Musk have to spend if he bought 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 now facing a possible ban in the US, depending on the Supreme Court’s decision on national security laws, which would see service providers like Apple and Google fined if they continue to host the app after the January 19 deadline.

While ByteDance has not made an official announcement about selling TikTok's US operations, Bloomberg News has revealed that the Chinese government has considered a scenario in which Elon Musk, the owner of social network X, could buy the US operations. This is just one of the options being considered.

If ByteDance decides to sell, potential investors could pay between $40 billion and $50 billion for TikTok’s U.S. operations, according to Angelo Zino, senior vice president at CFRA Research, who estimates TikTok’s U.S. user base and revenue compared to rival apps.

TikTok currently has about 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 exceeds Snapchat, Pinterest, and Reddit, which have 96 million, 74 million, and 32 million monthly users, respectively.

Notably, Mr. Zino’s current estimate is lower than the more than $60 billion he gave in March 2024, when the House passed its first national security bill, which was signed into law by President Joe Biden the following month. The difference reflects the changing regulatory landscape and TikTok’s 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 U.S. acquirer will not own under the deal.

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

Meanwhile, analysts at Bloomberg Intelligence gave a lower estimate, valuing TikTok’s US operations at $30 billion to $35 billion. The assessment was published in July 2024, noting that the valuation was significantly reduced because it would be a “forced sale.”

Bloomberg Intelligence also points to significant challenges in finding a potential buyer. They stress that the buyer would need to not only have the financial wherewithal to make the deal happen, but also meet stringent regulatory requirements, particularly around data privacy. These hurdles could hamper TikTok’s ability to expand its advertising business after the acquisition.

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

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

Although he asserted that he was “a big fan of Elon Musk,” O’Leary also said frankly that “the likelihood of regulators, even under the Trump administration, approving this deal is very low.”

TikTok, X and O'Leary Ventures did not respond to requests for comment.