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ByteDance investors value TikTok at $50B in takeover bid

reuters.com

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Re: ByteDance investors value TikTok at $50B in takeover bid

#51

Post by Firebrand »

alehul wrote: post #14

Many are suggesting that TikTok would be overvalued at $50B. If that's the case, do you believe FB is overvalued at $662B? Instagram, as of 2018, was estimated to be worth around $100B on its own (with about 1b MAUs, versus TikTok's 800m). TikTok seems at least equally addictive, and its algorithm does a fantastic job at quickly showing good content that matches your interests.

It’s been reported Facebook has been offering exclusivity contracts to some of TikTok’s most followed personalities for its new competitor, Reels. It reminds me of Microsoft’s streaming platform giving millions to Ninja and Shroud only to close it down months later.

TikTok has been very good at focusing on new content discovery first when you open the app, making you swipe left to see the people you follow second—this is the opposite of Instagram. If Facebook does manage to pull people like Charli D’Amelio and Addison Rae to Reels and makes them more prominent, it would really be interesting to see two different philosophies compete against each other.

Re: ByteDance investors value TikTok at $50B in takeover bid

#52

Post by basseq »

alehul wrote: post #22
pjc50 wrote: post #16

Earlier quoted context omitted.

.. and how's the revenue?

Good question - TikTok generated $176.9m revenue in 2019, but it's still in its infancy in terms of generating revenue. Instagram, acquired for $1b in 2012, had $0 revenue. WhatsApp, acquired for $19b in 2014, had $10.2m revenue. Based on TikTok's usage-per-day and active users being comparable to Instagram, they could presumably generate ~similar revenue if focused on it. With these types of apps, growth comes first…

Also, from the article:

"The investors’ bid values TikTok at 50 times its projected 2020 revenue of about $1 billion..."

So that's a projected revenue growth of 465%. That's still projected, but a big number.

Re: ByteDance investors value TikTok at $50B in takeover bid

#53

Post by paulpauper »

alehul wrote: post #14

Many are suggesting that TikTok would be overvalued at $50B. If that's the case, do you believe FB is overvalued at $662B? Instagram, as of 2018, was estimated to be worth around $100B on its own (with about 1b MAUs, versus TikTok's 800m). TikTok seems at least equally addictive, and its algorithm does a fantastic job at quickly showing good content that matches your interests.

At this point, give how wrong over the past decade pundits have been about Tesla, Uber, Facebook, Shopify, Amazon (and many others), I am inclined to discount/ignore any prediction of a rapidly-growing consumer tech or app company being a bubble. These pundits have a horrible track record of predicting this sort of stuff. A common thread for why these forecasts tend to be so bad is, such pundits ignore the growth of free cash flow and operating profit margins, erroneously lumping one-time expenses as being the same as a recurring cost. Yes, they can both make a company lose money, but a company that does not incur recurring advertising and other expenses is in a much better position than a company that loses money on every sale/user-acquisition and tries to make it up on scale. This was the problem with Groupon and also Fab. They advertised heavily on Facebook in 2010-2011, paying way more in recurring costs to acquire users then they could ever hope to recoup from sales. If you are paying $1-2/click (Facebook ads are expensive, especially for US adult traffic) and given all the click fraud and fake likes, maybe only 1/50-1/100 convert, if you cannot extract at least $100 of value from each user, you die.

Re: ByteDance investors value TikTok at $50B in takeover bid

#54

Post by jbob2000 »

alehul wrote: post #36
jbob2000 wrote: post #18

Earlier quoted context omitted.

Apps are easy to install... and easy to uninstall. Where's Snapchat these days? What about Vine? What about tumblr? These companies make apps to try to monetize a community, but communities are fickle and easy to scare off. If I were an investor, I'd value these apps for the computers in their offices and the code their developers write and that's it. Maybe $100mil if you get me on a good day. You can't value them fo…

I definitely empathize with your position on this, and you're right that community is the valuable part, hence the focus around active users. What makes TikTok unique beyond growing like wildfire: their monetization strategy will be easier (the social aspect leads to relevant advertising), and their community is more stable! The stable community is driven in part by their algorithms, which replace Instagram and Faceb…

> What makes TikTok unique beyond growing like wildfire: their monetization strategy will be easier (the social aspect leads to relevant advertising), and their community is more stable!

I think monetizing a community that did not start with the expectation of being monetized will be difficult. Reddit is dealing with this right now and it's degrading the site and the community and they still aren't profitable. Youtube has the same issue right now - many creators did not plan to have their channel monetized and are now being shutdown or delisted because their content is thought to be dangerous to the monetization efforts.

This is what I mean when I say that TikTok is "easy to uninstall". As soon as a creator feels burned by the monetization efforts, they press and hold and click Delete App and they are gone. There's no contract in place that says "if you quit you must give us 60 days notice or pay a penalty", there's no stickiness but the validation from the community.

Monetization puts the company in the middle of the validation the creator gets from the consumer. Creators detect this, feel like they are being cut off from their drug, and bail to find the next "dealer".

Re: ByteDance investors value TikTok at $50B in takeover bid

#55

Post by wavesounds »

creaghpatr wrote: post #44
14 wrote: post #39

Earlier quoted context omitted.

What is the age group they target? I am not 40 and don’t know a single person with snap anymore. None of my kids or their friends so is it like 15-25 year olds or who uses snap now days? Thanks

They have more 13-14 yr olds in the US than Facebook or Instagram; that was announced at their conference a month ago. Almost everyone under the age of 18 I know has it, idk about usage compared to apps like tiktok though.

Typo: 13-24 yr olds

Re: ByteDance investors value TikTok at $50B in takeover bid

#57

Post by chvid »

eunos wrote: post #45
chvid wrote: post #17

This is from Twitter and might be a hyperbole or conspiracy: Overheard on current US war on Tiktok. A thread: Talks abt ban on Tiktok subsiding a bit because Tiktok in talks with General Atlantic and Sequoia to sell to a US shell company. US demanding that Tiktok technical staff be completely changed, AI algorithm be based in the US... Continued at https://twitter.com/CarlZha/status/1288284750273114112

> AI and tech team evaluated by NSA Suppose that PRC considers to open the GFW but with the same requirements (AI and tech team evaluated by MSS). Would that be acceptable?

That sounds like a good deal. I will ask my higher ups.

Re: ByteDance investors value TikTok at $50B in takeover bid

#58

Post by jbob2000 »

josephpmay wrote: post #19
jbob2000 wrote: post #18

Earlier quoted context omitted.

Apps are easy to install... and easy to uninstall. Where's Snapchat these days? What about Vine? What about tumblr? These companies make apps to try to monetize a community, but communities are fickle and easy to scare off. If I were an investor, I'd value these apps for the computers in their offices and the code their developers write and that's it. Maybe $100mil if you get me on a good day. You can't value them fo…

Snapchat is doing great and making money. They're still worth over 33 Billion.

They're making money until they aren't. OnlyFans is sweeping a large amount of adult models off of Snapchat. Everyone is doing disappearing content, stories, and photo filters. The only thing they have left are the contracts they signed with companies and creators when they were in their heyday.

Re: ByteDance investors value TikTok at $50B in takeover bid

#59

Post by zippy5 »

alehul wrote: post #22
pjc50 wrote: post #16

Earlier quoted context omitted.

.. and how's the revenue?

Good question - TikTok generated $176.9m revenue in 2019, but it's still in its infancy in terms of generating revenue. Instagram, acquired for $1b in 2012, had $0 revenue. WhatsApp, acquired for $19b in 2014, had $10.2m revenue. Based on TikTok's usage-per-day and active users being comparable to Instagram, they could presumably generate ~similar revenue if focused on it. With these types of apps, growth comes first…

There’s no way they could generate similar revenue per user. Revenue per user depends on much advertisers are willing to pay and there are a couple of differences: 1) Targeting: Instagram has exceptional ad targeting because it utilizes facebook’s existing data which TikTok tool doesn’t have.

2) Online spending: In theory wealthier countries / demographics should have higher online spending. May also have correlations with gender, age, employment status, number of digital devices, delivery infrastructure, etc.

3) Advertiser relationships: the real customers have to want to put their stuff next to your content.

4) Political risk: if many countries ban it, it’ll lose access to a lot of high value markets.

Lastly, profitability doesn’t always come later particularly for high bandwidth applications. Personally I’ve been getting a higher number of ads from YouTube but they are exceptionally poorly targeted (I skip at-least 90%). I would expect google to have as much data as anyone. The only explanation I have is that it’s simply too expensive to produce video ads to have an efficient targeted ad market.

Re: ByteDance investors value TikTok at $50B in takeover bid

#60

Post by reaperducer »

paulpauper wrote: post #53
alehul wrote: post #14

Many are suggesting that TikTok would be overvalued at $50B. If that's the case, do you believe FB is overvalued at $662B? Instagram, as of 2018, was estimated to be worth around $100B on its own (with about 1b MAUs, versus TikTok's 800m). TikTok seems at least equally addictive, and its algorithm does a fantastic job at quickly showing good content that matches your interests.

At this point, give how wrong over the past decade pundits have been about Tesla, Uber, Facebook, Shopify, Amazon (and many others), I am inclined to discount/ignore any prediction of a rapidly-growing consumer tech or app company being a bubble. These pundits have a horrible track record of predicting this sort of stuff. A common thread for why these forecasts tend to be so bad is, such pundits ignore the growth of…

All of that is only true if you only look at the successes, such as those you’ve illustrated.

For every pundit-bashed unicorn, there are tens of thousands of times the pundits got it right.

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