TikTok made big waves by hiring away Disney's (NYSE: DIS) chief of streaming, Kevin Mayer, to take over as its CEO. It was an indication that the company was looking to enter the mainstream and strike partnerships with major brands. However, these plans have basically shriveled away. He had noteworthy success in building out Disney's streaming properties to become the number 2 streaming company behind Netflix (Nasdaq: NFLX).
The company has been under heavy scrutiny due to its connections with China and accusations that its app has been collecting data on users. As a result, the Trump administration ordered ByteDance to either sell TikTok or cease U.S. operations.
Mayer seems to have quit, because it wasn't the role that he anticipated, and he's likely to not have any autonomy under a new company. A new company will have its own ideas and direction for the company and would likely appoint someone who's in sync with that vision. He left Disney after being passed over for the CEO position.
Acquisition Imminent
It's also a signal that the acquisition of TikTok may be imminent. The latest rumor is that Walmart (NYSE: WMT) and Microsoft (Nasdaq: MSFT) would be teaming up to make the purchase. Previously, Amazon (Nasdaq: AMZN) and Oracle (Nasdaq: ORCL) were rumored as contenders.
Walmart's inclusion in TikTok negotiation is certainly interesting. It originally was part of a group that included Google (NASDAQ: GOOGL) and SoftBank (OTC: SFTBY) that was bidding for the company. However, it seems to have recently joined Microsoft. Apparently, Walmart sees TikTok as a way to build out its e-commerce division.
Walmart wants to be the exclusive e-commerce and payments provider for the platform with Microsoft handling the tech part like guarding user data and powering the platform. The proposed deal values TikTok between $20 billion and $30 billion.
TikTok has been a smashing success and is the fastest-growing user app on the planet. It's adding about 10 million uses a month and is expected to generate $6 billion in revenue next year. Given current growth rates, it's going to be bigger than Instagram within a year. And, it'll only lag behind Facebook (Nasdaq: FB) and YouTube. Its biggest validation may be that YouTube and Instagram are building TikTok-clones.
It's also the most popular app among the teenage demographic which is the group that advertisers are most eager to target. The company's format also makes it an ideal vehicle to deliver ads.