What are Fixed Income Securities?
Fixed income securities used to be a relatively obscure part of the financial markets. Up until the late 1970s, bond markets were used by wealthy individuals, corporations, and even governments to park large sums of money in low-risk-low return securities. Since these bonds were mostly issued by sovereign authorities, they were considered to be one […]
Introduction to Liquidity Ratios
Liquidity can be defined as the ability of a firm to make good its short term obligations. Most businesses function on credit. Hence to run a business firms have to both extend credit as well as ensure that they receive credit as well. Liquidity ratios measure the relationship between the amounts of short term capital […]
Capital Budgeting and Depreciation
Depreciation is an important concept in capital budgeting. This is because it is a non cash expense and ideally should not have any effect on the cash flows. This is the reason why it is added back during cash flow calculations. Since the amount of depreciation never actually left our bank account in the form […]
Risks in Public-Private Partnerships
In the previous article, we have already seen that building stadiums where professional sports franchises operate is a very expensive and complex task. We have also seen that it is not profitable either for the private entity or the government entity to build such stadiums on their own. In such cases, the public-private partnership (PPP) […]
How Decisions Made By Central Banks Affect the Stock Market?
In the past month, the Dow Jones Industrial Average had seen a spectacular fall. The market had crashed more than a thousand points. This crash happened on the speculation that the Federal Reserve i.e. the central bank of America is planning to raise interest rates. The mere mention of the possibility of an interest rate […]
When we talk about social media, we often refer to companies like Facebook, Instagram, Twitter, and LinkedIn. However, in the past few years, another company has emerged as a huge player in the social media space. This company has created an application that is known for having high levels of user engagement. The application being talked about is TikTok.
TikTok has taken the world of social media by storm. This is because millions of people are using this application to create content. This application is very successful amongst the younger target audiences. As a result, Bytedance, the Chinese company which has created TikTok has become the most valuable start-up in the world. The company is valued at close to $280 billion.
However, despite its high levels of user engagement, TikTok seems like an application that is not meant for entertainment only. Most people around the world are not clear as to how TikTok generates revenue and how it has become one of the most valuable applications across the world.
In this article, we will explain the business model of TikTok which enables it to generate significant amounts of profitability.
The business model of TitTok is that it allows users to create, watch and share 15-second videos. These videos can be made catchy since TikTok allows the users to choose from various background filters and various sounds. The application has been downloaded and installed more than 315 million times across the globe!
Even though TikTok is a free app from the consumer's point of view, it still has various revenue streams which it can draw upon. TikTok has developed various forms of advertisements that it uses to make money on its application. Some of the most prominent revenue streams have been listed in the article below:
TikTok has been tight-lipped about the profit that it generates. The company does not share too much information. Also, since it is based in China, there is even more opacity as information shared for regulatory purposes is also not known. However, some estimates show that TikTok derives most of its revenue from China.
Estimates suggest that the company generates 80% of its revenue from China. However, the company is now trying to diversify into the global marketplace. The company faces a significant challenge as it has been banned in several countries because of the fear that it may be sharing user-generated data with the Chinese government.
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