Musk’s Rocket Ship Takes Flight as Do Mnuchin’s TikTok Ambitions
The SpaceX Starship stands on the launch pad ahead of its third flight test from Starbase in Boca Chica, Texas on Tuesday. Photo by Chandan Khanna/AFP via Getty Images.Let’s start with some good news: today’s successful rocket launch by Elon Musk’s SpaceX (cool video here). This was the third flight test of SpaceX’s Starship, the enormous new rocket the company is building to launch second-generation Starlink internet satellites, among other things. The test lasted an hour (for more details, see here). It was a good reminder that for all of Musk’s nutty behavior, as displayed on X, he does have a knack for building electric cars and other real things. And that’s not nothing.
Then there are unreal things. Former Treasury Secretary Steve Mnuchin said on CNBC today he was putting together a “group to buy TikTok.” Don’t you love his ambition? Maybe we’re wrong, but we thought an asset had to be for sale before someone could buy it—unless the government plans to seize TikTok through eminent domain. And given that the Chinese government will almost certainly use export controls to prevent a foreign company from buying TikTok from its parent, ByteDance, any talk of a purchase is moot, no matter what happens with the ban-or-sell bill now before Congress. Mnuchin surely knows that. Perhaps he just likes being in the mix on a big story.
Let’s imagine for a moment that China did let ByteDance sell TikTok. How would you put together a deal? Just agreeing on a price would be a nightmare. We’ve reported that TikTok was on track to generate about $20 billion in revenue last year. On that basis, given where Meta Platforms is trading, TikTok could be worth as much as $180 billion. A buyer would surely laugh at that price, pointing out that this is a forced sale and TikTok loses money. But under those circumstances, what is the right price? And what could a buyer afford? After all, no one should borrow money to buy TikTok, given its losses. As Musk has found with Twitter, now called X, borrowing money to buy a social media app can be hazardous to your financial health.
If a public company was the buyer, and it could use its stock as the currency in a purchase, that could significantly reduce the amount of cash it would have to lay out. But antitrust regulators would likely rule out the only public companies big enough to absorb a deal of that size! One possibility that might work: The U.S. shareholders in ByteDance, such as Sequoia Capital and Susquehanna International Group, could roll their stakes into equity in TikTok, allowing the buyer to spend less on buying out Chinese investors.
All of this is imaginary, however, given the likely opposition of the Chinese government. So next time someone tells you they’re “putting together” a consortium to buy TikTok, just smile and ask what medication they’re on.
Award Winning
We don’t love to toot our own horn, but why should we be different from everyone else? The Information earned five awards in the Society of Advancing Business Editing and Writing’s annual Best in Business awards, as well as two honorable mentions. The winning stories were as follows.
In the Breaking News category: Open AI Fires Its CEO
Interim OpenAI CEO: Microsoft Has ‘Utmost Confidence’ in Startup Following Altman Departure
OpenAI President Brockman Resigns Following CEO Firing
Before OpenAI Ousted Altman, Employees Disagreed Over AI ‘Safety’
Three Senior OpenAI Researchers Resign as Crisis Deepens
OpenAI Co-Founder Altman Plans New AI Venture
In the Investing category: IPO Drama
‘We Haven’t Won Yet’: Stripe Finds Growth Has a Cost
No ‘Sugarcoating’: Travel Startup Navan’s Turbulent Ride Toward an IPO
Why the Two Biggest Winners in Instacart’s IPO Clashed
In the Travel/Transportation category: Convoy Goes Off the Road
How Trucking Startup Convoy Drove Itself Into the Ground
Convoy Halts New Orders, Tells Employees to Prep for ‘Transition’
Digital Trucking Company Convoy Explores Options, Including a Sale
In the Banking category: Banking Fakes and Scams
Tiny Banks That Powered Cash App Grew Like Crazy. Then the Feds Came Calling
A Bank Watchdog Crowned Its First Chief Fintech Officer. His Work History Was A Web Of Lies
JPMorgan’s Greek Fintech Unicorn Draws Regulatory Blitz
In the Newsletter category: Artificial Intelligence Fever
What OpenAI’s ‘Bonkers’ Deal Structure Means for Silicon Valley
A New Bubble Is Forming for AI Startups, but Don’t Expect a Crypto-Like Pop
AI Startup Rewind Gets 170 Offers—and $350 Million Valuation in Unusual Fundraising
In the Feature category (honorable mentions):
Google’s Darkest Days: After Three Deaths, a Workforce Reckons with a Changed Company
Delivering in the Dark, Amazon’s Gig Drivers Face Guns and Death
In Other News
- Apple earlier this year acquired DarwinAI, a Canadian startup developing AI software to visually inspect components during manufacturing, as the iPhone maker tries to catch up in the generative AI race, Bloomberg reported.
- Microsoft will no longer charge customers fees when they move all of their data out of its Azure cloud platform and close their accounts, the company said on Wednesday (more here).
- JPMorgan Chase has been fined roughly $350 million for failing to properly monitor client trading activity over nearly a decade, an action foreshadowed to investors in February (more here).
- Salesforce led a $106 funding round in Together AI, which provides cloud servers to developers of generative AI applications, the startup said (more here).
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More detailsMartin Peers is a columnist and co-executive editor of The Information, where he has worked since 2014. He was managing editor from 2015 through 2021. He previously worked for The Wall Street Journal and Daily Variety, among other publications. He is based in New York and is on Twitter @mvpeers.