Episode summary
ByteDance to Get About 50% of TikTok US Profit Under Trump Deal | Bloomberg Intelligence
Bloomberg Intelligence
· · 17 min · Hosts: Paul Sweeney, Scarlet Fu · Guests: Mandeep Singh, Sam Fazeli, George Ferguson
Summary
Bloomberg Intelligence analysts said the proposed TikTok U.S. deal could leave ByteDance with roughly half of the profits even after selling a majority stake, because it would still help run the day-to-day ad and e-commerce operation. Mandeep Singh argued the reported $14 billion valuation is low only because the new structure splits the business into separate entities, with the infrastructure and algorithm separated from the operating layer. He said that arrangement helps explain why Oracle and other investors would accept a lower price.
On pharmaceuticals, Sam Fazeli said investors largely shrugged at President Donald Trump’s plan for a 100% tariff on branded drug imports because many companies have already announced large U.S. manufacturing investments. He said the market reaction reflects a belief that exemptions for companies building in the U.S. will limit the real impact. Fazeli also warned that tariffs, visa limits, and cuts to science funding create confusion for drug development and could weaken the talent pipeline over the next five to 10 years.
George Ferguson said Boeing’s return of more regulatory power to perform final safety checks is a meaningful sign of progress. He said the company needs higher build rates, better cash generation, and a smaller inventory backlog to complete its turnaround, and he expects more clarity on those goals at the October 23 earnings call.
Key takeaways
- Mandeep Singh said ByteDance could keep about 50% of TikTok U.S. profits because it would still run the ads and e-commerce operation.
- Mandeep Singh said the reported $14 billion TikTok U.S. valuation looks low only because Oracle and other buyers would inherit a cost structure, not just an asset.
- Sam Fazeli said investors are betting Trump’s 100% branded-drug tariff will be softened by U.S. manufacturing exemptions.
- Sam Fazeli said the bigger long-term risk for pharma is confusion from tariffs, H1B limits, and science-funding cuts that could weaken the talent pipeline.
- George Ferguson said Boeing’s regained authority to do final safety checks supports higher build rates and better cash generation next year.
Notable quotes
“they are going to recreate the algorithm and that other entity that bite dance is responsible for will uh actually run the day-to-day operations”
“it makes sense that they will keep half of the profits because guess what a company like Oracle yes it can run the infrastructure the app but it doesn't have the expertise”
“I think the reason you see pretty much everything's green on my screen in the large farmerland except for Nova Nordisk”
“The feeling is thorough confusion because on the one hand you want uh skilled workers in these skilled jobs in the US”
“Boeing needs to have this cap lifted, the production cap lifted in order for it to push to higher build rates next year”
How the episode opens
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Let's go over to another interesting story today in the tech space. That's Tik Tok. um it needs to be divested the US operations looks like there are some buyers out there.
Now the question is what are they going to pay for it? Mandep Singh joins us. He's a senior tech analyst at Bloomberg Intelligence.
Uh Mandep I saw the reporting this morning from Bloomberg about a $14 billion valuation and I was saying what isn't it worth multiples of that? Um but then I see that there might be an arrangement where bite dance is going to receive a lot of the profitability of the US operation. what's the latest that you know
So that profitability option is uh tied to the fact that you know bite dance still has to run the operation so what they have done is created two separate entities one entity will house the data it will control the content and the algorithm so they are going to recreate the algorithm and that other entity that bite dance is responsible for will uh actually run the day-to-day operations and you it will be responsible for showing the ads any e-commerce that flows through Tik Tok and so from that perspective it makes sense that they will keep half of the profits because guess what a company like Oracle yes it can run the infrastructure the app but it doesn't have the expertise to you know uh run the ad operations or do e-commerce at the end of the day it's more infrastructure than applications and so from that perspective it makes sense that you know bite dance is involved in running the operations And uh we've also learned today that Bite Dance is expected to get about 50% of Tik Tok US's profit under this potential Trump deal.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- tiktok us profit deal
- bytedance ownership
- tariffs on branded drug imports
- trump tariff exemptions
- boeing 737 max airworthiness approvals
Companies and tickers mentioned
- BA
- TikTok
- ByteDance
- Boeing
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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