from Hacker News

TikTok’s potential $588 per user valuation in Microsoft deal

by dig6x on 8/7/20, 12:20 PM with 46 comments

  • by propter_hoc on 8/7/20, 1:21 PM

    I can't believe I'm the first to point this out, but this article is kind of obviously wrong.

    The analysis in the article is like looking at Tesla on an earnings per share basis, when it's actually heavily priced on forward projected earning potential.

    Like Tesla, Tiktok is a growth stock. This valuation doesn't reflect its current value per user - it's baking in an implied doubling or trebling of its user base in some short time span.

    I'm not saying that the assumption that Tiktok will meet its projections (and justify this valuation) is warranted, but I am saying that comparing Tiktok's $/user to Facebook, a mature/somewhat stagnant social network, is the wrong way to look at this.

  • by dasudasu on 8/7/20, 2:18 PM

    Could anyone in the 90s and early 00s have imagined that the internet would end up being one big competition for who can monitor and track their users best, just to run the most efficient ads, and that this value would be in the hundreds of dollars per user?

  • by simplertms on 8/7/20, 1:11 PM

    The most interesting thing about this deal outside the obvious political drama in my opinion is that this will change Big Tech landscape overnight.

    Microsoft has done enterprise so well for so long but has always struggled on 'consumer tech' outside of its Windows OS. Acquiring a social media platform is going to catapault it into the heart of consumer tech.

    Question is will TikTok be a parallell arm or will it help Microsoft's consumer tech ambitions for One Drive, Xbox etc?

  • by jariel on 8/7/20, 1:26 PM

    This will be Nadella's Albatross.

    He's been given far too much credit for being a 'nice guy' whilst most operationalising the foundations left for him. He has not done anything fundamental for the company, other than changed the tone of the leadership of the company. He's a good steward.

    TikTok is completely out of MS cultural reach, and in that way it's a poor fit. Remember Skype? How about IE that ruled the world and MS couldn't figure it out either.

    To boot, TikTok is a fad. It's just a bigger vine, and teenager will quickly move on to something more substantial over time.

    FB is truly a social network and has a degree of lock-in and therefore staying power, but younger people have largely fled it as well. Snapchat and Twitter both have baseline utility for communicating.

    I'm not sure TikTok is any of that - it has the faddish appeal, but none of the underlying utility.

  • by seven4 on 8/7/20, 12:56 PM

    “At a market cap of $755 billion (at point of writing) Facebook’s per user value is around $288. If Facebook is some leading indicator for the pinnacle of per user value for social media, then at $50 billion for the roughly 85 million American users, TikTok’s per user value would be $588.”

    I think facebook would pay a hefty premium even above that; handing Microsoft a buzzing social media platform on a silver platter - with the weight of Microsoft's resources behind it. Surely Zuckerberg's nightmare manifest...and he has no real chance of trying to outbid - what with all the anti-trust press.

  • by onetimemanytime on 8/7/20, 1:24 PM

    The value is in "it will be the next FB". But we already have a FB and plenty of other existing social apps. They will not go down with a whimper and they will clone features, advertise etc etc. Plus, there's a limit on how many socials a person can really use.

    So, sure there is value, but feet to the ground

  • by Someone on 8/7/20, 12:32 PM

    I think the valuation depends on there being multiple buyers because, if Bytedance doesn’t sell, they’ll lose those valuable customers.

    So, are there multiple suitors? If so, who? Facebook and Google probably are out because of fear the sale will be disallowed because of their market dominance.

  • by afrojack123 on 8/7/20, 1:15 PM

    Where can we bet against this. The prices are unbelievable.

  • by ergwwrt on 8/7/20, 2:05 PM

    2 people become $1200. 3 people $2100..

  • by downrightmike on 8/7/20, 2:47 PM

    Seriously, how the hell was this deal handed, gift wrapped to Microsoft? There are better suitors.

  • by bearjaws on 8/7/20, 1:12 PM

    The only thing is, TikTok will be an amazing advertising platform for the up and coming Gen Z.

    I do believe its an absurd price though, Facebook is around $288 per user vs $588 here. If a platform that is very good at making money from Millenials, Gen X and even Boomers (all of these generations are established in their careers, and have far more money than Gen Z) is $288 per user how is this ever going to pay off?

  • by jcsnv on 8/7/20, 1:19 PM

    Does $588/user include _future growth of new users_?