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Good question - TikTok generated $176.9m revenue in 2019, but it's still in its infancy in terms of generating revenue. Instagram, acquired for $1b in 2012, ha

by alehul 6y ago

Good question - TikTok generated $176.9m revenue in 2019, but it's still in its infancy in terms of generating revenue. Instagram, acquired for $1b in 2012, had $0 revenue. WhatsApp, acquired for $19b in 2014, had $10.2m revenue. Based on TikTok's usage-per-day and active users being comparable to Instagram, they could presumably generate ~similar revenue if focused on it. With these types of apps, growth comes first, and profitability comes later (and the profitability step seems to come easily, unless FB cannibalizes you).

cj 6y ago
[removed comment to add the following] Where are you getting the $176mm figure?
basseq 6y ago
Also, from the article: "The investors’ bid values TikTok at 50 times its projected 2020 revenue of about $1 billion..." So that's a projected revenue growth of 465%. That's still projected, but a big number.
- rydre 6y ago
  Projected revenue for 2021 is $6b. $50B valuation is robbery at day sight by investors. TikTok's China sibling Douyin is projected to make $28 billion this year in China.
  - pjc50 6y ago
    Astonishing - I take it tiktok is quite heavy on video advertising then? I'm surprised to see the advertising market be so lucrative within China.
zippy5 6y ago
There’s no way they could generate similar revenue per user. Revenue per user depends on much advertisers are willing to pay and there are a couple of differences: 1) Targeting: Instagram has exceptional ad targeting because it utilizes facebook’s existing data which TikTok tool doesn’t have. 2) Online spending: In theory wealthier countries / demographics should have higher online spending. May also have correlations with gender, age, employment status, number of digital devices, delivery infrastructure, etc. 3) Advertiser relationships: the real customers have to want to put their stuff next to your content. 4) Political risk: if many countries ban it, it’ll lose access to a lot of high value markets. Lastly, profitability doesn’t always come later particularly for high bandwidth applications. Personally I’ve been getting a higher number of ads from YouTube but they are exceptionally poorly targeted (I skip at-least 90%). I would expect google to have as much data as anyone. The only explanation I have is that it’s simply too expensive to produce video ads to have an efficient targeted ad market.
- askafriend 6y ago
  > There’s no way they could generate similar revenue per user. I'll take the opposite side of this bet any time. TikTok will become a juggernaut on par with Instagram and perhaps even surpassing it.

by alehul 6y ago

cj 6y ago

[removed comment to add the following] Where are you getting the $176mm figure?

basseq 6y ago

Also, from the article: "The investors’ bid values TikTok at 50 times its projected 2020 revenue of about $1 billion..." So that's a projected revenue growth of 465%. That's still projected, but a big number.

rydre 6y ago
Projected revenue for 2021 is $6b. $50B valuation is robbery at day sight by investors. TikTok's China sibling Douyin is projected to make $28 billion this year in China.
- pjc50 6y ago
  Astonishing - I take it tiktok is quite heavy on video advertising then? I'm surprised to see the advertising market be so lucrative within China.

zippy5 6y ago

There’s no way they could generate similar revenue per user. Revenue per user depends on much advertisers are willing to pay and there are a couple of differences: 1) Targeting: Instagram has exceptional ad targeting because it utilizes facebook’s existing data which TikTok tool doesn’t have. 2) Online spending: In theory wealthier countries / demographics should have higher online spending. May also have correlations with gender, age, employment status, number of digital devices, delivery infrastructure, etc. 3) Advertiser relationships: the real customers have to want to put their stuff next to your content. 4) Political risk: if many countries ban it, it’ll lose access to a lot of high value markets. Lastly, profitability doesn’t always come later particularly for high bandwidth applications. Personally I’ve been getting a higher number of ads from YouTube but they are exceptionally poorly targeted (I skip at-least 90%). I would expect google to have as much data as anyone. The only explanation I have is that it’s simply too expensive to produce video ads to have an efficient targeted ad market.

askafriend 6y ago
> There’s no way they could generate similar revenue per user. I'll take the opposite side of this bet any time. TikTok will become a juggernaut on par with Instagram and perhaps even surpassing it.