ByteDance To Get 50% Of US TikTok Profit Despite Majority Sale: Report

According to a Bloomberg report, Bytedance is likely to receive a “licensing fee” of all revenue generated from making its algorithm available to the U.S. operating entity.

TikTok’s parent company, ByteDance, will reportedly still receive 50% of the profits from the U.S. spinoff of its social media app, even after selling a majority ownership stake.

According to a Bloomberg report, citing sources familiar with the matter, Bytedance is likely to receive a “licensing fee” of all revenue generated from making its algorithm available to the U.S. operating entity, which includes Oracle (ORCL), Silver Lake, and MGX. 

Retail sentiment on Stocktwits around Bytedance, which is not a publicly traded company, was in ‘extremely bearish’ territory even as chatter trended at ‘high’ levels.

The report added that TikTok U.S. would compensate ByteDance for revenue derived from its algorithm, representing around 20% of incremental revenue under the new proposal. Additionally, ByteDance would also receive around 20% of the profits from its remaining equity stake. The U.S.-backed consortium and existing investors would share the remaining profit

TikTok’s three U.S. investors are expected to collectively hold approximately 45% of the company’s American entity, while ByteDance is expected to retain a 19.9% stake in the company. The remaining 35% would be owned by other ByteDance investors. Oracle’s stock fell as much as 2.3% in morning trade, with retail sentiment dipping to ‘bullish’ from ‘extremely bullish’ territory amid ‘high’ levels of chatter. 

Friday’s report comes after President Donald Trump signed executive orders on Thursday finalizing ByteDance’s divestment from TikTok. Trump had repeatedly delayed the sale while negotiating a compromise to keep the platform operational.

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