Elon Musk as Potential Buyer for TikTok Amid Ban Threat
Tesla (TSLA) stock experienced a significant surge, rising by over 6% on Friday. This movement was driven by speculation that CEO Elon Musk might acquire TikTok.
The social media platform faces an American buyer requirement or a nationwide ban effective next week. Musk is reportedly the leading candidate to purchase TikTok.
The US Supreme Court denied TikTok's appeal to overturn a federal law that prohibits the platform. Major companies could face penalties for providing TikTok access through their app stores.
Under a 2024 law enacted by President Biden, the ban will take effect on January 19th unless ByteDance, TikTok's Chinese parent company, sells the app to an American buyer. National security concerns related to the platform were cited as the reason for the law.
According to Wedbush analyst Dan Ives, ByteDance and Beijing are exploring the possibility of Musk acquiring TikTok's US operations. Ives believes that Beijing's relationship with Musk would enhance the likelihood of a deal to avoid a ban.
Bloomberg previously reported that Chinese officials considered this option, despite sources indicating Beijing's preference for ByteDance retaining ownership over selling to Musk. TikTok has denied these claims.
Meanwhile, former President Donald Trump has expressed his intention to "save" the app. Trump has multiple options to avert the ban, such as urging Congress to repeal it or extending the deadline for TikTok's sale.
Ives suggests that Musk will play a substantial role in resolving TikTok's situation, potentially forming a consortium to acquire the platform. He estimates its value in the $40 billion to $50 billion range.
Musk has become an ally of Trump, receiving a quasi-governmental role leading the Department of Government Efficiency. Since Trump's election in November, Tesla shares have increased by 74%, attributed to the "Trump trade."