There's a 90% chance TikTok will be banned in the US unless it goes through with an IPO or gets bought out by mega-cap tech, Wedbush says

• There's a 90% chance TikTok will be banned in the US after CEO Shou Chew gave evasive testimony to Congress, according to Wedbush.
• Wedbush said TikTok will have to go through with an IPO or sell itself to a mega-cap tech company to avoid a ban.
• "A matter of when, not if TikTok gets banned in US," Wedbush analyst Dan Ives said.

The chances of TikTok getting banned in the US have soared to 90% after CEO Shou Zi Chew gave evasive testimony to Congress last week, according to Wedbush analyst Dan Ives.

Ives said in a note on Monday it's "a matter of when, not if TikTok gets banned in the US."

Such a ban would be unprecedented, but it highlights growing concerns that TikTok parent company ByteDance is beholden to the Chinese government and could ultimately enable some form of spying on TikTok's user base of more than 150 million Americans.

"The bi-partisan legislation going through the Beltway now lays the path for a ban and the final straw that will ultimately break the camel's back for TikTok is the CFIUS ruling around the corner with a formal Biden White House statement around a likely TikTok ban the likely next step," Ives explained, referring to the Committee on Foreign Investment in the US.

For its part, TikTok has floated "Project Texas," which is a $1.5 billion plan that would move all of TikTok's data to US-based servers operated by Oracle.

But any US ban on TikTok wouldn't mean its base of obsessive users immediately lose access to the platform, according to Wedbush.

Instead, the ban could mean that TikTok will be granted a three- to six-month window to either go public via an IPO, or sell itself to an American company.

"While the price tag will be eye-popping, TikTok's strategic value and consumer platform will have a number of financial and tech strategic players interested once a sale becomes the formal path," Ives said.

Potential buyers of the popular social media platform include a potential consortium of private equity players, as well as mega-cap tech giants including Microsoft, Apple, Oracle, and/or joint bids from a handful of tech companies depending on the structure and price tag of the deal.

"An IPO and potential spin-off are also potential outcomes although the much discussed algorithm remains a major X variable as detaching the algorithm from ByteDance would be a very complex process with much scrutiny from US regulators," Ives said, adding that a wall of legal challenges from ByteDance could delay any progress towards a potential sale.

The potential ban on TikTok would likely be a boon to the social media companies that have seen ad dollars diverted away from them and towards TikTok, including Facebook, Snapchat, and Google's YouTube.

"For Meta and Zuckerberg as well as Snapchat and Google, watching the TikTok hearing was like eating popcorn watching a good movie as the social media disruption from TikTok will clearly benefit Meta and Snapchat front and center in the eyes of the Street," Ives said.