TikTok IPO: Revenue, Users, Valuation & How to Invest

Initially, the app was called ‘Musical.ly’, starting out as a lip-syncing video app. Acquired by ByteDance in 2018, the app was rebranded as TikTok.

In its current format, TikTok allows users to create, watch and share videos. The app uses an algorithm to provide a feed of content specific to the user’s interests, which has helped drive high engagement.

The TikTok app has also been the starting point for many of the most recent viral crazes and influencer-driven content.

The bulk of TikTok’s revenue is generated from advertising and in-app purchases. A rapidly growing user base has also led to a massive jump in revenue. 

More engaged users mean that the advertising becomes more valuable and makes it a more attractive place for companies to spend bigger chunks of their advertising budget. 

Similar to Meta, Snap, and Alphabet, the data collected on users of TikTok allows companies to direct its advertising and marketing towards very specific customer prospects, instead of a general audience.

Again, this makes it more likely that the advertising campaigns will succeed and increase sales figures, ensuring companies keep spending money to advertise through TikTok.

As TikTok is owned and controlled privately by ByteDance, it’s best to look at some of the current top shareholders of ByteDance to get an idea about the leading investors:

• Coatue
• General Atlantic
• Hillhouse
• KKR
• Sequoia Capital
• SIG
• Softbank
• Source Code Capital

Initially, the TikTok IPO was planned for 2020. The company was looking to take advantage of its fast-growing popularity as one of the most downloaded apps in the world. 

However, tensions between the US and China have meant that the IPO of TikTok (and ByteDance, TikTok’s parent company) has been put on hold. 

The US has concerns that user data from the app will be readily accessed by the Chinese government, breaching privacy laws. TikTok’s China equivalent and counterpart Douyin is basically the same and shares an algorithm. But China and America monitor and regulate companies in very different ways.

It’s a particular concern with an app like TikTok because the app itself permits control of users’ smartphone cameras, microphones and sometimes tracking activity across other apps. But, it’s difficult for TikTok/Douyin and ByteDance to effectively split the business to meet both contrasting rulesets.

However, it seems the majority of requirements have now been met for TikTok to be listed on a US stock exchange, and the IPO is eagerly awaited.

Luckily for TikTok, the delays haven’t hurt the business or its valuation. The estimated valuation of the brand has increased from roughly $18 billion in 2021 to around $65 billion in 2023 due to the continued growth and popularity of the app. 

For TikTok’s parent company ByteDance, the estimated valuation has been as high as $300 to $400 billion!

Many investors are excitedly hoping that TikTok will finally be listed on a US stock exchange sometime during 2023, but this isn’t officially confirmed.

It can be possible to order TikTok shares before the IPO. This is known as a “pre-placement.” In theory, several brokers may allow you to do just that. However, the only one which has already announced it will make an effort to give access to the TikTok IPO is Freedom24.

Among other brokers, TradeStation has not announced if and when it will become available but seems open to it since they offer access to US IPOs. Please take a look at both:

1# Freedom24

Founded in 2008, Freedom Finance, the official company name of Freedom24, has already offered to its 400,000+ worldwide clients participation in 280+ IPOs, including 40,000+ trade stocks, 1,500+ ETFs, 1,000+ US Stock Options, and 147,000+ bonds on the largest exchanges in Europe, Asia, and the US.

With Freedom24, the process of participating before the IPOs is incredibly straightforward:

1. Open an account with a minimum of 2,000 USD (the minimum for an IPO request);
2. Submit a request for the available IPO stocks before their respective IPO dates;
3. Freedom24 automatically credits your account with those shares purchased by them on your behalf (“oversubscribed” IPOs may make it difficult for your orders to be filled completely);
4. Sell your stocks after the 93-day lock-up period or purchase a forward sale contract through Freedom24 to lock your gains before the 93 days period.

To invest in the TikTok IPO, you will technically become a Freedom Finance client. Nothing to worry about here, that’s simply the name of the broker running the platform Freedom24. 

Want to know more about Freedom24? Check our Freedom24 review.

2# TradeStation

Founded in 1982, TradeStation is a US broker committed to offering you the best trading experience within their rewarded platforms and brokerage services. You can trade stocks, ETFs, options, futures, and crypto with competitive pricing models.

With TradeStation, you must follow these steps:

1. Open an account with a minimum of 500 USD;
2. Download the ClickIPO app (Available both on iOS and Android);
3. Register on ClickIPO’s trading platform and select TradeStation as your broker;
4. Link your TradeStation account in the “My Account” section of the ClickIPO app.

For US residents, you have zero commission trades (including the IPO stocks). For international investors, please consult their pricing here.

There is no guarantee that TradeStation will offer the TikTok IPO, still, the optionality is there. We encourage you to follow the company and wait for their official announcement. After that, ask TradeStation if they will offer it.

Alternatively, instead of placing a pre-placement order for TikTok shares before the IPO, you can wait until the public offering before attempting to buy the newly listed stock.

Interactive Brokers and eToro are two top-rated brokers where you can access TikTok shares and buy the stock with low fees after the IPO. Take a look at both these brokerage options below:

1# Interactive Brokers

Founded in 1978, the IBKR platform lets you access over 150 market destinations in 33 countries and trade any asset you may be looking for: Stocks, Bonds, ETFs, Forex, Funds, Commodities, Options, Futures, CFDs, Cryptos Futures, and even tiny small companies (a.k.a micro caps).

If you want to buy TikTok stock after the IPO, here’s how you can buy shares using Interactive Brokers:

1. Open a trading account with Interactive Brokers.
2. Deposit funds into your account.
3. Once it’s available, search for the TikTok stock, there is no confirmed ticker symbol right now.
4. Place the type of order you wish to use (e.g. market, limit, stop etc.).
5. Once you’ve bought your desired number of TikTok shares, continue to monitor performance.

If you’d like to learn more about the IBKR platform, check out our full-length Interactive Brokers review.

2# eToro

Founded in 2006 in Israel, eToro now has over 30 million customers worldwide. The platform is widely known for its social and copy trading features. It allows users to trade stocks, forex, commodities, cryptocurrencies, CFDs, and ETFs.

If you’re planning to buy TikTok stock after the IPO, here’s how you can buy shares using eToro:

1. Open an account with eToro.
2. Head to the ‘Markets’ page, and select ‘Stocks’.
3. Search for the TikTok stock and select ‘Trade’.
4. Next, hit ‘BUY’.
5. Choose how much you want to invest in TikTok or the number of shares you want to buy.
6. Select your leverage (or ensure that leverage is set to X1).
7. Decide on a take-profit parameter if you want to automate a future sale of your TikTok stock.
8. Finally, hit ‘Open Trade’.

If you’d like to learn more about eToro, check out our in-depth eToro review.

Bottom line on investing in the TikTok IPO

The TikTok IPO is one that’s going to attract both casual and experienced investors. Traders worldwide will hope to buy shares in TikTok when they become available. 

Luckily, TikTok’s business has been growing from strength to strength. This is good news because it means the company is more likely to carry out its IPO sooner rather than later. A drop in popularity would see a lower valuation, meaning less money could be raised. So it’s best for TikTok to strike while it’s at its peak in terms of users, revenue, and growth. 

The regulatory issues seem to be getting sorted out. Although TikTok faces stiff competition from the likes of Meta, Alphabet, and Snap – it’s TikTok that has been the social media business to beat in recent years. All the more established social media companies have been losing market share and ad revenue to TikTok.

Of course, overtaking the likes of Meta will be a tough challenge. And it will be an ongoing effort for TikTok to stay relevant as growth becomes harder to achieve. Also, China’s recent crackdown on tech companies could mean further problems or obstacles. 

But suppose TikTok is able to successfully navigate all these challenges. In that case, this could be an extremely exciting opportunity for investors to own a piece of the next big social media company. The TikTok IPO date is still unknown, but investors worldwide are sure to be waiting on the edge of their seats for its announcement.

Let us know in the comments below if you plan on investing in the TikTok IPO!