TikTok Backlash Could Cost US Investors Billions Of Dollars
Chinese-owned ByteDance is backed by a large number of American entities.
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Subscribe for free to get more stories like this directly to your inboxTikTok is a thorny issue … not just on Capitol Hill but on Wall Street. The popular social media platform’s close ties with China have sparked efforts by U.S. lawmakers to either force its parent company, ByteDance, to sell it or trigger a nationwide ban.
A complicated investment
Few startup companies anywhere on the planet have seen gains on pace with ByteDance, which is currently worth an estimated $225 billion. And a slew of American investors identified the trend early on, opting to put money into the company where it has continued to grow.
But now that the Chinese company has come under intense scrutiny by U.S. lawmakers and regulators, there’s a nagging uncertainty regarding how (or even if) these investors will ever be able to collect the financial gains that right now are little more than numbers on a spreadsheet.
Since ByteDance is a privately held company, there’s no option for investors to simply sell their shares as they could if it was a publicly traded entity. Considering the questions surrounding the company’s future, U.S. investors could soon be in a lose-lose situation.
Billions on the line
Former National Security Council Director for China Matt Turpin said firms with a stake in ByteDance have essentially “stranded” their assets by making “an investment in something that’s going to be very difficult to make liquid.”
The list includes some heavy-hitters, including:
- Private equity firm General Atlantic invested in 2017 and its CEO sits on ByteDance’s board.
- Global trading firm Susquehanna owns about 15% of the company.
- Others include private equity firm the Carlyle Group and hedge fund Coatue Management.
Investment banker Jonathan Rouner compared the current shift away from China to the abandonment of Russian assets after the Ukraine invasion, which cost investors more than $100 billion.
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