If the transaction occurs, Wedbush’s Daniel Ives expects ByteDance to sell TikTok to Elon Musk’s X without the algorithm for $40 billion to $50 billion.
Social media stocks are trading lower on Tuesday before the Jan. 19 deadline, when the legislation banning TikTok will take effect unless the Supreme Court rules the move unconstitutional. Congress gave the Chinese app an ultimatum in April last year to sell its U.S. unit or face a potential ban.
The negative sentiment can be traced back to a Bloomberg report that said TikTok parent ByteDance had approached Elon Musk regarding a sale if the ban is upheld.
Musk To Step In?
The report said that the rumored move to court Elon Musk, the owner of X short-messaging app, may have to do with his proximity to President-elect Donald Trump. The Chinese government reportedly has floated the idea of X taking over TikTok U.S. and running both businesses together.
According to the report, this could be a win-win proposition for Musk, as TikTok’s 170 million users can help X attract more advertisers to its platform, and the billionaire’s xAI artificial intelligence (AI) company can use the massive data generated from TikTok.
Wedbush analyst Daniel Ives commented on the rumors that this is not a “total shock route.”
According to the analyst, the incoming Trump administration is exploring options if the Supreme Court upholds the ban. Trump met with TikTok CEO Shou Chew at his Mar-a-Lago residence in mid-December and his social media posts suggest he is not in favor of the ban.
Ives also pointed to Musk’s strong relationship with Beijing which could give added comfort to the latter.
If the transaction takes place at all, Ives expects ByteDance to sell TikTok without the algorithm for $40 billion to $50 billion.
According to the analyst, this would significantly enhance the value of the Twitter/X platform, and Musk would likely take outside investments for this potential golden asset pickup.
Ives also flagged another possibility of ByeDance opting for a a joint partnership, with Musk playing a major role and helping avoid a true ban of TikTok in the US.
However, Variety reported that China has refuted the rumors.
Retail Mixed
Even as social media stocks have had a down day, retail sentiment toward these stocks is mixed.
On Stocktwits, retail sentiment toward Meta Platforms, Inc. (META) is ‘bullish’ (56/100), Pinterest, Inc. (PINS) stock is ‘Neutral’ (52/100) and Reddit, Inc. (RDDT) is ‘bearish’ (44/100).
Sentiment toward Alphabet, Inc. (GOOG) (GOOGL) stock is ‘bullish’ (55/100) and that toward Trump-owned Trump Media & Technology Corp. (DJT) has turned to ‘bullish’ (74/100) from ‘extremely bullish’ a day ago.
In social media stock moves, Meta stock slipped 2.65% at $592.51, Pinterest stock fell 2.04% to $29.79, Reddit stock lost 0.80% to $163.33, Alphabet stock pulled back 0.69% to $189.70 and TMTG stock slumped 8.83% to $39.13 in mid-day trade on Tuesday.
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