TikTok Global IPO: what you need to know
A US-based IPO could be on the cards for TikTok – a leading name in the video sharing and social networking space. Learn all about how to trade or invest in the expected TikTok IPO.
How to trade or invest in the TikTok IPO
You’ll be able to trade or invest in TikTok shares when the company goes public. You can either trade on the price of shares rising and falling with spread bets and CFDs, or you can invest in the company directly by share dealing.
To trade or invest in TikTok shares after the initial public offering (IPO), follow these steps:
- Decide whether to trade or invest
- Create an account or open My IG to access your account
- Search for ‘TikTok’ on our trading platform
- Open and monitor your position
TikTok IPO: what you need to know
The TikTok IPO doesn’t currently have a set date, and the technicalities of the listing are being worked out. The potential listing was announced by TikTok's parent company, ByteDance, after the Trump administration raised national security concerns about the app. As a result of the concerns, it was reported that US multinationals Oracle and Walmart would acquire a minority stake in a new company - TikTok Global - that would control TikTok's US operations.
But, this has not been confirmed. And, with the Biden administration now at the helm of the US political machine, it's unclear whether the deal with Orcale and Walmart will proceed, or whether there will be an IPO at all.
What is TikTok likely to be valued at when it lists?
The most recent valuation for TikTok was around $50 billion back in July 2020. This places a valuation on TikTok that is 50 times greater than its 2020 revenue of $1 billion.
What could the TikTok share price be when it lists?
The target share price for the TikTok IPO has not yet been confirmed, and we likely won’t know more until a deal is made between Oracle and Walmart with ByteDance.
Why is TikTok listing?
A TikTok IPO has been on the horizon for a while now but the company has run into regulatory red tape and scrutiny from the US government. It was previously facing a ban in the US ahead of concerns over data collection of American users.
Who are TikTok’s current investors?
TikTok Global will be held 80% by ByteDance and 20% by a joint stake by Oracle and Walmart. But this is currently contentious, and it is said that Oracle and Walmart want the company to be majority controlled by US firms. Time will tell who TikTok’s investors are when the company goes public, and indeed will reveal the split between US and Chinese firms’ ownership of the social networking platform.
What’s the outlook for TikTok ?
The outlook for TikTok is strong, especially if the TikTok Global IPO goes ahead without a hitch. The issue is that if the IPO is delayed or the listing continues to be contentious, then the outlook might dampen and investor confidence might wane. That said, TikTok is already bigger than Snap Inc, despite being founded several years after the social networking behemoth.
So, investors might be looking to ride the wave of TikTok’s potentially continued success going forward, and a strong IPO performance would not be unexpected.
What is TikTok’s business model?
TikTok’s business model is based on video creation, sharing and social networking. The platform is used to create short videos, with content ranging from pranks to lip syncing and dance routines. The videos are often short (normally between three and 15 seconds), which makes the platform not entirely dissimilar to the discontinued Vine app.
The platform offers in-app purchases of coins which users can ‘gift’ to their friends, followers or favourite creators. These coins can be exchanged for digital gifts. Also, TikTok offers paid advertisement services to brands for product promotion within the app which accounts for a large proportion of its revenue.
How has TikTok been performing?
TikTok has been performing strongly since its creation. The coins which the platform sells to its users bring in around $3.5 million per month, and advertising revenue brings in even more. But, since the company has been reporting revenues under ByteDance, there are no concrete figures for TikTok’s overall performance so far.
That said, we can see from mobile app intelligence companies who track this sort of thing that TikTok reported a 310% increase in the fourth quarter (Q4) 2019 vs the same period in 2018 for in-app purchases, topping out at over $50 million. This figure was provided by Apptopia. Another company, SensorTower, reported a higher figure of $87 million for in-app purchases in Q4 2019 – which is a sign of exciting things to come for the video creation and sharing platform.
Who are TikTok’s main competitors?
TikTok’s main competitors include Snap Inc (All Sessions), YouTube and Facebook – which all have a considerable foothold in the video creation and sharing space. While these might be more well-established names, the TikTok IPO could be one of the most well-received listings in the social networking world for quite some time.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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