How to Buy TikTok Stock in 2023: A Guide for Investors

how to invest in tiktok

TikTok, the short-video sharing sensation, has taken the world by storm, amassing billions of downloads and a massive user base in just a few short years. As the app continues to grow in popularity, many investors are left wondering how they can get in on the action and potentially profit from the platform’s success. With rumors of a possible initial public offering (IPO) swirling, now may be the perfect time to consider investing in TikTok and its parent company, ByteDance, through TikTok stock.

In this guide, we’ll explore the ins and outs of investing in TikTok stock, from understanding the company and its parent company, ByteDance, to examining the current stock status and potential IPO. We’ll also discuss alternative investment opportunities in social media and the risks and considerations you should bear in mind when investing in TikTok stock. So let’s dive in and learn how to make the most of this exciting investment opportunity.

Short Summary

  • TikTok is a rapidly growing social media platform owned by the Chinese company ByteDance, with potential IPO plans in 2020.

  • Investors can gain exposure to TikTok pre-IPO through secondary markets, private equity funds and companies with stakes in ByteDance.

  • Careful research and consideration should be taken when investing in TikTok due to its pre-IPO stage and associated risks.

TikTok Overview: The Social Media Sensation

Launched in 2017, TikTok has quickly become one of the most downloaded apps worldwide, with over 1.6 billion monthly active users in Q4 2022. This Chinese app has managed to captivate users with its entertaining short videos, low barriers to entry, and innovative use of artificial intelligence to personalize content delivery. In fact, TikTok is the first Chinese app to achieve such massive global success, making it an intriguing prospect for investors.

TikTok is owned by ByteDance, a privately held Chinese company valued at $220 billion. While TikTok itself is not yet publicly traded, there have been reports of a potential initial public offering (IPO) in 2020.

As we delve deeper into the world of TikTok investing, it’s crucial to understand the company’s background, operations, and potential for future growth.

How TikTok Makes Money

TikTok is a great platform for brands to advertise their products and services on. Moreover, it also provides the opportunity for users to make in-app coin purchases, which can later be exchanged for digital gifts. These gifts can be sent to friends, followers or even their favorite creators.

The company is looking to diversify and maximize their income streams with new ventures in the digital world such as live streaming, gaming and e-commerce.

ByteDance: The Parent Company Behind TikTok

ByteDance company headquarters

Founded in 2012, ByteDance is a Chinese technology company specializing in AI-driven content. As the parent company of TikTok, ByteDance has managed to garner significant financial backing from notable investors such as Sequoia Capital China, CCB International, General Atlantic, SoftBank Vision Fund, Goldman Sachs, Morgan Stanley, Tiger Global management, and Kohlberg Kravis Roberts. This impressive roster of investors has helped propel the company to its current valuation of approximately $220 billion.

ByteDance’s success has been driven not only by the popularity of TikTok, but also by the company’s ability to leverage AI to capitalize on social media usage in the Western region. As the first Chinese company to achieve such success in the Western market, ByteDance’s future growth prospects are undoubtedly intriguing for investors.

TikTok’s Current Stock Status

Although TikTok has captured the attention of investors worldwide, it’s important to note that the platform is not yet publicly traded. This is primarily due to its ownership by ByteDance, a privately held Chinese company, and eight other venture capital companies.

While there have been reports of a potential IPO in 2020, unfortunately, the TikTok IPO is on hold for the time being as ByteDance struggles to adhere to Chinese and US stock exchange regulations.

Potential TikTok IPO: What to Expect

If TikTok were to go public, it could very well become the largest of its kind in history, surpassing Alibaba’s market cap of $231 billion. It could also open up a new wave of investment opportunities for investors, with the potential for high returns. An IPO would allow the general public to buy shares in the company, allowing them to participate in its future growth and success.

However, it’s important to remember that an IPO is not a guarantee, and the current prognosis suggests that a ByteDance IPO may not occur in the near future as complying with the regulations of both the Chinese and American stock exchanges has been challenging,

How to Invest in TikTok Pre-IPO

While TikTok is not yet publicly traded, there are still ways for investors to gain exposure to the company through pre-IPO investing. Pre-IPO investing refers to the process of investing in a company before it goes public through an initial public offering. There are several ways to invest in TikTok pre-IPO, including secondary markets, private equity funds, and investing in companies with stakes in ByteDance.

Secondary Markets

Secondary markets refer to the markets where securities are traded after the company’s offering on the primary market, also known as the stock market. These markets include stock exchanges and over-the-counter markets, as well as online platforms like EquityZen, which facilitate the trading of pre-IPO employee shares from privately held companies.

Investing in pre-IPO shares through secondary markets can be an attractive option for some investors, particularly high net worth individuals who meet certain qualifications. However, it’s important to remember that investing in secondary markets comes with its own set of risks and challenges, and investors should carefully consider their options before pursuing this route.

Private Equity Funds

Another way to invest in TikTok pre-IPO is through private equity funds. These investment funds invest in companies like ByteDance through venture capital rounds. Some private equity funds with exposure to ByteDance include Sequoia Capital China, General Atlantic, and Hillhouse Capital Group.

Investing in private equity funds can provide access to pre-IPO investments in companies like TikTok, but it’s important to remember that this option is typically limited to high-net-worth individuals. As with any investment, it’s crucial to conduct your own research and ensure that you’re comfortable with the entire portfolio of companies before making an investment decision.

Companies with ByteDance Stakes

A third option for investing in TikTok pre-IPO is to invest in companies that have stakes in ByteDance. Some notable examples include SoftBank Group Corp and KKR. By investing in these companies, investors can gain indirect exposure to ByteDance and its popular subsidiary, TikTok.

While investing in organizations associated with ByteDance has its own advantages, it also carries a responsibility to be aware of the potential risks that come with it. One must consider and evaluate the situation carefully before taking any big decisions. Investors should take into account factors like the PE ratio of SoftBank Group Corp and the current value of KKR when making their investment decisions.

Alternative Investment Opportunities in Social Media

If you’re hesitant to invest in TikTok or are looking for more diversified exposure to the social media sector, there are alternative investment opportunities to consider. Some popular social media stocks include Tencent Holdings ADR (OTCMKTS: TCEHY), owner of the widely popular app WeChat, Snap Inc. (NYSE: SNAP), the parent company of Snapchat, and Meta (NASDAQ: META), formerly known as Facebook, which owns both Facebook and Instagram.

By investing in these alternative social media stocks, you can still potentially profit from the growth of the social media industry without being solely dependent on the success of TikTok.

Risks and Considerations When Investing in TikTok

dices over newspaper, profit, loss risk

While investing in TikTok may seem like an attractive opportunity, it’s important to consider the potential risks and downsides associated with such an investment. For one, TikTok is still in its pre-IPO stage, which inherently carries a higher level of risk than investing in a publicly traded company. Additionally, there have been controversies surrounding the platform, such as bans in certain countries and security concerns.

Before diving into an investment in TikTok, it’s essential to carefully weigh these risks and potential rewards. Balancing the risks and rewards can help you make informed decisions and reduce the possibility of losses. Always conduct thorough research and consider seeking professional advice when making investment decisions.

Summary

In conclusion, investing in TikTok presents an exciting opportunity for investors looking to capitalize on the platform’s meteoric rise in popularity and potential future growth. While the company is not yet publicly traded, there are various ways to invest in TikTok pre-IPO, including secondary markets, private equity funds, and investing in companies with stakes in ByteDance. Additionally, alternative investment opportunities in social media stocks like Tencent Holdings, Snap Inc., and Meta can provide more diversified exposure to the sector.

Frequently Asked Questions

Is TikTok on the stock market?

No, TikTok is not on the stock market. It is privately owned by its parent company ByteDance, and its stock does not trade publicly on any exchanges. However, it has been estimated to have a value of $250 billion in private trades. Thus, investing in TikTok’s stock is currently not an option.

Is TikTok going to IPO?

It appears that ByteDance is taking steps to make a TikTok IPO a reality. Reports indicate that ByteDance is working with major financial partners, like Kohlberg Kravis Roberts, SoftBank Group, Sequoia Capital, General Atlantic, and Hillhouse Capital Group.

With these resources in place, it is likely that a TikTok IPO could happen eventually.

Who owns shares in TikTok?

TikTok is owned by ByteDance, a Chinese internet technology company. They are financially backed by Kohlberg Kravis Roberts, SoftBank Group, Sequoia Capital, General Atlantic, and Hillhouse Capital Group, who own a combined 60% of the company’s shares. Employees and founders own 20% and 20% respectively.

Some details of the relationship between TikTok and ByteDance remain unclear to outsiders.

Who is the CEO of TikTok?

In the first quarter of 2021, Shou Zi Chew was appointed as the CFO for ByteDance who then replaced TikTok’s CEO Kevin A. Mayer who left after a brief stint of 3 months.

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