Some corporate standoffs are settled in courts, on diplomatic cables, or sometimes not at all, rather than in a boardroom. One of those is beginning to feel like pressure on ByteDance to sell TikTok’s U.S. operations. Washington is in favor of divesting. Beijing has made it clear that it will not permit one. And depending on the direction of the wind, the valuation of the company at the center of it all could change significantly.
ByteDance is not a tiny business that is silently taking in political pressure. In an internal share buyback, the company’s valuation increased from $315 billion to over $330 billion as of mid-2025. Revenues for the second quarter reached about $48 billion, which was more than Meta’s total for the same period. The majority of this money came from the Chinese market through apps like Douyin. Despite its widespread cultural influence in the US, TikTok only makes up a small portion of ByteDance’s overall revenue. Most people don’t seem to understand how important that detail is.
In its most basic form, the TikTok divestiture threat asks ByteDance to take a portion of itself and give it to an American buyer. However, the requested piece is more than just a user base or a brand. The algorithm, which determines what 170 million American users see when they launch the app, has always been the real question. Most people agree that TikTok’s algorithm is its most valuable asset. Additionally, Beijing has no intention of letting it go, according to several analysts and Chinese officials.
China has made this clear. Chinese officials made it clear that any transfer of the algorithm would be a technology export requiring government approval, which they were unwilling to grant, in response to earlier U.S. pressure through the Committee on Foreign Investment in the United States.
One analyst stated bluntly, “This algorithm is Chinese home-grown technology,” and Beijing considers it vital to national security. Without it, TikTok cannot be sold. Additionally, you most likely won’t be able to get Beijing’s approval to add it.
This has complicated effects on valuation. Under the correct circumstances, CFRA Research analysts predicted that TikTok’s U.S.-only business could sell for more than $60 billion. However, those requirements would have to include a working algorithm, legal clarity, and approval from the Chinese government—three things that haven’t happened in the same room at the same time. In the absence of the algorithm, a buyer is effectively purchasing an audience and a social media brand. These items are valuable, but not $60 billion.
It’s still unclear if any serious buyer has figured out what a deal without the algorithm would actually look like. Concerns about who would own the source code, whether ByteDance employees would continue to have access, and whether a licensing agreement with the original Chinese parent would essentially keep Beijing in operational control even after a nominal ownership change were raised by the proposed divestiture structure that was proposed in late 2025. The Supreme Court’s 9-0 decision had already emphasized that the law is not satisfied by cosmetic divestitures. Investors who are keeping an eye on that particular detail should exercise caution.
For its part, ByteDance seems to have done the math. According to people close to the company, the leadership would rather completely shut down TikTok in the United States than give up the algorithm in the event of a fire sale. It’s not an illogical preference. Given the larger business, TikTok’s U.S. revenues are real but not indispensable. But everything, including Douyin, is driven by the algorithm. Giving it up or letting it fall into hostile hands is a completely different kind of loss.
The fact that a significant portion of ByteDance’s $330 billion valuation depends on a constantly changing business environment is quietly unsettling to investors observing the company from the outside. The business is genuinely expanding, profitable, and dominant in its home market. However, the threat of TikTok’s divestiture casts a shadow that is difficult to clear. Every new executive order, congressional deadline, and Beijing statement introduces a degree of uncertainty that is difficult for valuation models to account for. The market seems to have mostly ignored the noise, but it isn’t going away.
ByteDance’s balance sheet will be affected regardless of whether Washington ultimately pushes for a forced sale, a ban, or some kind of negotiated middle ground. It is feasible to shut down TikTok in the United States. A poorly executed divestiture that transfers essential technology or incites other forms of Chinese retaliation is quite different. The business is aware of this. Beijing does the same. Less is known about whether Washington actually does.
