How to Invest in Tiktok
Investors are on the hunt for TikTok stock since it keeps growing in popularity. Keep reading to find out if you can invest in this social media app.
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It's easy to brush off TikTok as a silly app for teens. But you can't deny its popularity.
And when it comes to investing, many traders think TikTok has massive potential.
So how can you invest in TikTok?
In this guide, find out how you'll be able to invest in TikTok, plus what to consider before buying in.
What is TikTok?
TikTok is the most popular video-sharing social network service. The app has been on the rise since its release in 2016 and has become popular with younger Millennials and Generation Z.
TikTok reached 1 billion monthly active users in September 2021.[1] It was also the most popular iPhone app downloaded in the U.S. in 2021.
TikTok users create various short-form videos with durations from 15 seconds to three minutes. Those videos can range from genres like pranks, stunts, dance tricks, jokes, and entertainment.
In addition, the platform is perfect for marketing—TikTok accounts can reach a vast audience with minimal effort.
Most importantly, TikTok's ad revenue is estimated to reach over $11 billion in 2022.[2]
Who Owns TikTok?
ByteDance is the technology company behind TikTok. The company is based in Beijing and was founded in 2012.
Fun fact: TikTok is a story of two apps.
Here's how it went down:
In 2016, ByteDance released a social networking app called Douyin. This app operates separately in China. When they debuted their app worldwide in 2017, they named it TikTok.
Although the TikTok app and Douyin have comparable user interfaces, they are not identical.
ByteDance succeeded in its goals since TikTok has more engagement than YouTube and Instagram.
Is TikTok Publicly Traded?
ByteDance, the owner of TikTok, is not yet a publicly traded firm. You cannot invest and trade in the firm directly. There is also no official stock price.
It's unclear when (or if) ByteDance will become publicly traded.
And it's not an easy task for a company to become publicly traded. When a private company intends to go public, it must anticipate an exponential rise in public attention and comply with the Securities and Exchange Commission's (SEC) standards.
Is TikTok on the Stock Market?
TikTok stock is not available to buy on the stock exchange and there is no official TikTok stock price. However, the social media app is expected to go public.
Right now, TikTok has no ticker symbol or stock name. Only companies listed on stock exchanges have stock tickers.
How to Get Shares on TikTok?
You cannot directly buy shares as a retail investor. But you can invest in TikTok by buying shares in private equity companies.
TikTok shares are owned by private equity firms. Those are Softbank, KKR, Coatue, General Atlantic, Hillhouse, Sequoia Capital, and Source Code Capital.
Here are some top active investors whose shares you can buy:
- Softbank
SoftBank is one of the most active investors in technology companies. It has backed or acquired a long list of established tech firms like Slack, NVIDIA, Uber, and ARM.SoftBank Group Corp is listed on all major exchanges, so the purchasing process is straightforward. Due to poor earnings reports, SoftBank Group Corp.'s (Ticker: SFTBY) share price has dropped 50% from 2021 to 2022.
However, Softbank offers substantial value with a P/E of only 3.53 and an EPS of $5.94. In addition, the dividend yield reaches up to 0.73%.
- KKR
Kohlberg Kravis Roberts & Co. (KKR) is a leading global investment firm headquartered in New York. It provides investment management, capital markets, and more. Its aim is to achieve valuable investment returns by taking a methodical approach.So, if you want to invest in TikTok, you can buy shares in KKR.
This firm now represents serious value with a P/E of 6.92 and an EPS of $7.85. The market value of this publicly traded company's outstanding shares is estimated at $30 billion.
How to Trade the ByteDance (TikTok) IPO?
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The exact date of TikTok's IPO is expected in 2022, but it has not yet been announced. In fact, the ByteDance gray market offers traders the opportunity to trade both short and long before a potential IPO. In addition, the gray market price is based on a forecast of ByteDance's market value.
Here are the steps to start trading the ByteDance (TikTok) gray market:
- Create or log in to your trading account.
- Consider whether you want to trade CFDs.
- Search for "ByteDance."
- Select the size of your position.
- Open your position and monitor your trade.
Before the IPO, take the following short position in ByteDance by following these steps:
- Create or log into your trading account.
- Look for "ByteDance."
- Select the size of your position.
- To go short and speculate on the price falling, choose "sell" in the deal ticket.
- Confirm and track your short position.
If and when ByteDance lists, you will be able to trade it like any other stock on the IG trading platform.
Is investing in TikTok's IPO a good idea?
Many people see IPOs as huge money-making opportunities. But investing in IPOs can be risky, even more than buying shares of established public companies.
Here's why: There's less data available for private companies. Investors are making decisions based on unknown variables. However, going public can provide companies with much publicity.
Suppose you think the estimated value of the company is over- or under-priced. In that case, you can benefit from the disparity before the shares are publicly traded.
Therefore, you can buy the stock if you believe that the company's estimate will exceed its market price. On the other hand, you can sell if you think the price is over the top.
What is the Best Way to Invest in TikTok when it Goes Public?
Once the company goes public, TikTok stock trading will require a brokerage account. Once you have a brokerage account set up, you'll be ready to buy the shares when they hit the market
Even though you cannot own a share of TikTok, consider others. The best stocks to invest in are those of Twitter, Tencent, and more.
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Bottom Line
Considering TikTok's immense popularity, investing in this app might be a great idea. But you can't purchase TikTok stock—yet.
We would say that the best way to invest in TikTok is to wait for ByteDance to become public.
References
- ^ TikTok. Thanks a billion!, Retrieved 4/29/2022
- ^ Insider Intelligence . TikTok Ad Revenues to Surpass Twitter and Snapchat Combined, Retrieved 4/29/2022
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