Why do experts think $14 billion is undervalued for TikTok US?
When US President Donald Trump first suggested the possibility of banning TikTok due to national security concerns more than five years ago, the Beijing-based app from ByteDance Ltd was regarded as the envy of the global tech industry. The powerful algorithm transformed a stagnant social-media environment by engaging users with continuous recommendations tailored to their interactions with content.
However, the $14 billion valuation proposed for TikTok’s US operations is significantly less than previous assessments that neared $40 billion. The approximate figure, referenced by US Vice President JD Vance, surfaced as President Donald Trump put forth a proposal for American investors to purchase the US division from Chinese internet company ByteDance Ltd. Vance remarked that the purchasers will “ultimately” decide the amount paid. While potential buyers like Oracle Corp and Silver Lake Management LLC may appreciate a low-ball valuation, ByteDance and its existing investors could perceive it as amusing or even insulting. The White House did not provide an explanation for how it determined the $14 billion figure. TikTok’s Chinese parent, ByteDance, has set its self-valuation at over $330 billion, as indicated by its recent employee share buyback plan.
Ashwin Binwani, stated that the proposal “could be the most undervalued tech acquisition of the decade.” He estimated that the proposed figure represents approximately one-third of TikTok’s actual value. “By every major financial metric and peer comparison, this price tag looks dramatically misaligned with reality.” TikTok’s video-sharing platform stands out as one of the most popular social media properties in the US, based on average daily app usage, and has inspired rival short-video services like Instagram Reels and YouTube Shorts. According to Dan Ives, TikTok was estimated to be valued between $30 billion and $40 billion without the algorithm as of April 2025. Alan Rozenshtein, stated that the executive order left unanswered questions, including whether ByteDance would still control the algorithm. Assessing TikTok’s value has historically posed challenges, partly due to the intricacies of its highly regarded recommendation algorithm. Even under conservative assumptions, the US operation – the firm’s most lucrative market with 170 million active users – generates revenue exceeding $10 billion a year.
With a valuation of $14 billion, TikTok US would exhibit a price-to-sales ratio of approximately 1.4 times, aligning it with established, low-growth firms like Exxon Mobil Corp and General Mills Inc. In comparison, Meta Platforms Inc is valued at approximately 10 times its sales, while Alphabet Inc stands at around eight times. “The suggested value looks like daylight robbery,” stated Vey-Sern Ling. The transaction, required to be finalized within 120 days, aims to create a new joint venture for TikTok US, wherein ByteDance’s ownership would be diminished to below 20 percent to alleviate US national security apprehensions. The executive order reveals that the Trump administration is moving forward with the sale of TikTok’s US assets; however, numerous details are yet to be clarified, particularly regarding how the US entity would utilize TikTok’s most crucial asset, its recommendation algorithm.
