President Trump claims to have secured a deal that keeps TikTok operational in the U.S., yet investors shouldn’t anticipate a fast profit from a potentially lucrative initial public offering, according to sources from a U.S. investment group. This group is finalizing plans for a new company that complies with laws that threaten to ban TikTok if its ties to its Chinese parent, ByteDance, aren’t severed.
This legislation intends to prevent the Chinese government from using such apps for espionage. Interestingly, Trump, who previously criticized TikTok, has shifted his stance, realizing that promoting pro-MAGA content could help him tap into the app’s largely youthful audience—many of whom are under 25.
The downside, however, lies in the uncertainty surrounding the deal’s legality. Even though Trump insists that it is compliant, the outcome may depend heavily on who is in the White House. Under a bipartisan law sanctioned by the Supreme Court, the current president has the authority to determine if the deal is valid and whether it successfully eliminates Chinese control.
Looking ahead, a future Democratic president—like Gavin Newsom or J.B. Pritzker—might decide to hold investors accountable. They could argue that ByteDance’s ongoing involvement indicates a deliberate evasion of the law, which could place financial burdens on any investors who supported Trump.
This scenario could leave shareholders, including regular folks who bought into the IPO, with significant debts, potentially owing billions in damages as per the legal framework associated with the ban. Informing retail investors about these risky implications might negatively highlight the unstable basis of the deal, according to those familiar with the matter.
One investor mentioned, “If liability gets exposed, it could really cast doubt on how this TikTok deal was crafted. That’s why it’s all under the radar.” An IPO typically serves as a significant milestone for private companies seeking capital from major investors, and TikTok has indeed attracted funds from powerful private equity firms and even Oracle.
However, insiders concede that TikTok’s strategy—spinning off its U.S. operations into a separate entity—is anything but typical. While Trump insists on the deal’s legality, China still possesses considerable ownership stakes in U.S. businesses and continues to share essential algorithms that drive the platform’s addictive nature, which also raises concerns about potential spying.
While companies like Oracle might attempt to strip out any malicious code from the system, many questions linger about how effectively this can be done. Anyone other than Trump could feasibly deem the new arrangement illegal.
