TikTok Billion Investment: TikTok, the Chinese short video app, is set to invest $1.5 billion to become the controlling shareholder of an e-commerce unit within Indonesia’s GoTo Gojek Tokopedia. This move comes as TikTok aims to revive its online shopping business, which was suspended by regulators in Indonesia due to concerns about the protection of smaller merchants and users’ data.
The ban on online shopping via social media platforms in Indonesia prompted TikTok to shut down its e-commerce service, TikTok Shop. Despite the challenges, TikTok had initially launched TikTok Shop earlier in the year in Indonesia, leveraging its substantial user base to compete with fast-growing online sellers like Shein and PDD Holdings’ Temu, whose rapid growth was fueled by viral marketing on TikTok.
GoTo, a company encompassing ride-hailing, delivery, and financial services, witnessed an 8.3% drop in its shares after the announcement of TikTok’s investment. Investors, having anticipated a deal with TikTok, took profit from the recent rally in GoTo’s stock.
As part of the deal, TikTok will acquire a 75.01% stake in Tokopedia, Indonesia’s largest e-commerce platform, for $840 million. Additionally, TikTok Shop’s Indonesia business will be integrated into the expanded Tokopedia entity. The strategic partnership will undergo a pilot period, closely supervised by relevant regulators.
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With over 124 million users in Indonesia, TikTok, owned by China’s ByteDance, aims to transform its significant user base into a substantial source of e-commerce revenue. The transaction is expected to be finalized by the first quarter of 2024, with Tokopedia receiving a $1 billion promissory note from TikTok for working capital needs.
TikTok has committed to investing more than $1.5 billion in the enlarged entity over time, providing future funding without additional dilution to GoTo. Tokopedia competes with Shopee and Lazada in Indonesia’s growing e-commerce market, projected to expand to approximately $160 billion by 2030, according to a report by Google, Temasek Holdings, and Bain & Co.
Our Reader’s Queries
Is TikTok worth investing in?
TikTok’s impressive user growth rate makes it a promising investment opportunity if it goes public. As the fastest-growing social media platform of 2022, TikTok’s popularity is only expected to increase. Moreover, it has the potential to expand its reach and become a widely adopted tool in the professional world. With these factors in mind, TikTok’s future prospects look bright.
How much of TikTok is owned by China?
TikTok Ltd, a company owned by founders and Chinese investors (20%), other global investors (60%), and employees (20%), is based in both Singapore and Los Angeles. The company was incorporated in the Cayman Islands and is a subsidiary of Beijing-based ByteDance.
How much is TikTok worth?
According to reports, ByteDance’s launch of TikTok was worth a whopping $140 billion by mid-2020, with TikTok alone being valued at around $50 billion. This makes it the most valuable startup globally, which is quite an impressive feat.
Can you buy stock in TikTok?
Although TikTok is not publicly traded, it does provide its employees with restricted stock units that gradually vest over time, as long as they continue to work for the company. Once these units have vested, the employees are granted shareholder status.