How to Invest in Tiktok
Investors are on the hunt for TikTok stock since it keeps growing in popularity. Keep reading to find out how to 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.
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Who Owns TikTok?
TikTok is owned by ByteDance, a Chinese technology company headquartered in Beijing.
In 2016, ByteDance released a social networking app called Douyin. This app became wildly popular 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.
Is TikTok on the Stock Market?
ByteDance, the owner of TikTok, is not yet listed on the stock market. You cannot invest and trade in the firm directly. There is also no official stock price or stock symbol for it.
As of now, there is no mention of it going public.
So how can you buy TikTok stock, then?
TikTok's funding comes mostly from venture capital and private equity firms. Direct investment by individuals is almost impossible.
BUT there are still other ways for retail and accredited investors to invest in TikTok. Read on.
How to Buy TikTok Before IPO?
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1. Sign up with EquityZen
2. Search for TikTok
3. Invest via a fund that owns shares of TikTok
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If it's not available yet, users will be notified once it is.
Invest in Private Companies
- Invest in pre-IPO companies through an EquityZen fund.
- $10,000 minimum investment
- Available to accredited investors only
It's also reported that ByteDance allows its employees to sell their company shares once or twice a year.
So, stay updated with such news to check its availability in secondary markets.
How to Indirectly Invest in TikTok?
Retail investors can invest indirectly in TikTok by buying shares of TikTok and ByteDance's top investors.
Most company shares are owned by private equity firms such as Coatue, General Atlantic, Hillhouse, Sequoia Capital, and Source Code Capital.
Among these, there are only two public companies - Softbank and KKR & Co. Inc. and here's how you can buy their stocks.
- KKR
KKR & Co. Inc. (KKR) is a leading global investment firm headquartered in New York. It provides investment management, capital markets, and more.And investing in their company is simple.
- Log in or create your brokerage account.
- Fund your account. Note that some platforms require a minimum fund.
- Search for KKR & Co. Inc. (Ticker Symbol: KKR)
- Enter how many shares or the dollar amount you want to buy.
- Place order
Anyone can invest without special qualifications.
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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.But recent reports say that due to poor earnings reports, SoftBank Group Corp.'s share price has dropped 50% from 2021 to 2022.
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What are the Alternatives to TikTok Stock?
TikTok's main competitors are other social media apps like Facebook, Instagram, and YouTube. These are available for investment through their mother companies, META and Alphabet (GOOGL).
Facebook and Instagram (NASDAQ: META)
Facebook currently has an estimated 3 billion active users and created a global phenomenon when it acquired Instagram. It generated $85.96 billion in revenue in 2020.
The company rebranded into META Platforms, Inc. You can invest in these applications through META.
YouTube (NASDAQ: GOOGL)
Youtube is also one of the most used applications, with more than 2 billion active users. And a $28.84 billion revenue in 2021 alone. It is 100% owned by Alphabet Inc. (GOOGL), where you can directly invest.
Is investing in TikTok's IPO a good idea?
IPO investments can be risky. The volatile movement of prices on the first day of public trade causes significant gains or losses. So, most investors study the company's reasons for going public, analyze their financial history, and determine risk tolerance.
In the case of TikTok, it shows a good return because of its popularity among a wide age range. Bytedance, its mother company, is financially backed up by well-known funding companies like Sequoia Capital and Kohlberg Kravis Roberts Japan.
But there are also concerns, like TikTok's privacy and data breach, uncensored content, and others. These issues resulted in TikTok being banned or given only restricted access in different countries like India, Indonesia, and Bangladesh.
The United States of America has already banned TikTok from its government-issued devices.
The US Congress emphasizes TikTok's increasing privacy risks and threats to national security.
Investing in TikTok could be a high risk now. So, it is best to consult a professional financial expert if you plan to buy its IPO.
The SOCIAL strategy helps you remember the key steps to invest in TikTok or similar social media stocks:
- Sources: Identify reliable sources of information about TikTok and ByteDance.
- Opportunities: Look for investment opportunities in private equity, pre-IPO funds, or related public companies.
- Channels: Understand the different channels through which you can invest, such as private investment platforms.
- Analysis: Perform a thorough analysis of ByteDance's financial health and market position.
- Investments: Make informed investment decisions based on your research.
- Learning: Continuously learn about the market and adjust your investment strategy as needed.
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 a brokerage account is set up, you'll be ready to buy the shares when they hit the market.
And in the meantime, you can invest in TikTok alternatives.
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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.
FAQs
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. TikTok users create short-form videos, ranging from genres like pranks, stunts, dance tricks, jokes, and entertainment.
What is TikTok's Valuation or Worth?
TikTok's net worth is around $50 billion in 2022. While its parent company, ByteDance, has an estimated net worth of $250 billion. These data were based on the private trades in 2022.
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