Washington: The Trump administration’s estimated $14 billion valuation for TikTok’s US business has surprised investors, falling well below prior projections and prompting debate over whether it represents a bargain for potential buyers. The estimate was cited by Vice President JD Vance on Thursday, as President Donald Trump advanced a plan for American investors to acquire TikTok’s US operations from China’s ByteDance Ltd.
Low valuation surprises investors
The $14 billion figure is significantly lower than previous estimates that approached $40 billion, prompting some financial analysts to call it a “dramatic undervaluation.” Ashwin Binwani, founder of Alpha Binwani Capital, said, “By every major financial metric and peer comparison, this price tag looks dramatically misaligned with reality. It could be the most undervalued tech acquisition of the decade.”
Potential buyers reportedly include Larry Ellison’s Oracle Corp. and partner Silver Lake Management LLC, who are likely to welcome a low-ball valuation. However, ByteDance and its existing investors may view the figure as insulting.
TikTok’s US operations and revenue
TikTok, the short-video platform, remains one of the most popular social media apps in the United States, boasting approximately 170 million active users. The US operation alone generates revenue exceeding $10 billion annually, primarily from advertising. Analysts note that valuing TikTok has always been challenging due to its proprietary content recommendation algorithm and growth potential.
At the $14 billion valuation, TikTok US would carry a price-to-sales ratio of roughly 1.4, comparable to mature, low-growth companies such as Exxon Mobil Corp. and General Mills Inc. By contrast, competitors like Instagram (Meta Platforms Inc.) and YouTube (Alphabet Inc.) trade at 10 times and eight times sales, respectively.
Vey-Sern Ling, senior equity adviser for Asia technology at Union Bancaire Privee, described the figure as “daylight robbery,” highlighting the gap between the proposed price and the platform’s market influence.
Proposed deal and uncertainties
Under the plan, TikTok US would be spun off into a new joint venture, with ByteDance’s stake reduced to less than 20% to meet US national security requirements. While Trump has said that Chinese President Xi Jinping has given his blessing, Beijing has not publicly confirmed approval.
Several industry experts have raised concerns about operational leadership, noting that none of the proposed buyers are internet or consumer-facing companies. Alvin Foo, a venture partner at Zero2Launch, said, “Right now, it’s really Trump making the call, without listening or discussing with the Chinese government on whether the sale will go through. It’s like you’re putting a gun to ByteDance and saying ‘sell or you stop.’”
JD Vance emphasised that the ultimate sale price would be determined by the purchasers, leaving room for negotiation. Despite uncertainty, the 120-day deadline for completing the deal adds pressure for all parties involved.
Market and investor implications
The announcement has triggered a debate in financial circles about the relative value of TikTok’s US operations. Some analysts argue that the low valuation could attract deep-pocketed investors seeking a strategic foothold in US social media. Others caution that geopolitical risks, regulatory hurdles, and operational challenges could complicate the acquisition, limiting its appeal despite the low price.
The Trump administration’s intervention underscores the increasing influence of political considerations in shaping high-profile technology deals, particularly when they involve Chinese-owned platforms operating in the United States.