ByteDance, the parent company of the short video platform TikTok, is set to initiate a new employee stock buyback, valuing the Chinese tech powerhouse at over $330 billion, as its revenue continues to climb.
The firm plans to offer its employees $200.41 per share through a repurchase program. This valuation marks a 5.5% increase from $189.90, which was offered approximately six months ago.
The buyback initiative is expected to roll out in the fall.
The new buyback program, reflecting higher valuations, comes as ByteDance strengthens its position as the leading social media entity globally in terms of revenue, with second-quarter earnings rising 25% year-over-year, according to sources.
The surge indicated that the company’s second-quarter revenues reached nearly $48 billion, with a significant portion derived from the Chinese market despite ongoing political pressures regarding its US operations.
Details concerning the updated valuation and second quarter revenue growth had not been previously disclosed. The source requested anonymity as they were not authorized to speak to the media.
ByteDance did not immediately respond to the request for comment.
In the first quarter, ByteDance’s revenues exceeded $43 billion, establishing it as the number one social media company globally in terms of revenue, surpassing Meta’s $42.3 billion during the same period.
Both companies maintained sales growth of over 20% in the second quarter, driven by robust advertising demand.
ByteDance’s semi-annual buyback program allows employees of the private company to liquidate some of their holdings, showcasing a balance sheet strengthened by expanding both domestic and international operations.
It is becoming increasingly frequent for late-stage private firms to engage in regular buybacks to provide liquidity to employees without needing to go public prematurely.
Many organizations, including SpaceX and OpenAI, utilize external investors to fund these initiatives. However, ByteDance stands out as it consistently leverages its own balance sheet, reflecting financial flexibility and solid margins. The firm is also recognized as one of China’s AI leaders, investing billions in Nvidia chips, establishing AI infrastructure, and developing new models.
TikTok Sale
Despite surpassing Meta’s revenue this year, ByteDance’s valuation is less than one-fifth of Meta’s market capitalization, a discrepancy analysts largely attribute to political and regulatory risks faced in the US.
ByteDance is currently under significant scrutiny in Washington, where lawmakers are voicing national security concerns regarding its Chinese ownership.
Last year, Congress enacted legislation mandating that TikTok’s US assets be divested by January 19, 2025, or risk facing a nationwide ban affecting its 170 million US users. Donald Trump has made multiple remarks regarding TikTok and postponed the asset sale deadline until September 17, claiming that US buyers are lined up and that another extension could be possible.
Some lawmakers have criticized the delay, alleging that the administration is neglecting the law and disregarding national security worries related to China’s control over TikTok. While ByteDance is profitable, TikTok’s US operations have reportedly incurred losses, according to two sources. TikTok has not responded to Reuters’ request for comment.
If TikTok’s US assets are divested, they are expected to be owned by a joint venture involving an American consortium of investors and ByteDance.
The consortium currently leading the charge includes ByteDance’s existing shareholders, Susquehanna International Group, Atlantic General, KKR, and Andreessen Horowitz. Blackstone recently withdrew from the consortium, citing delays in the transaction timeline. A new ByteDance buyback could bolster morale among US-based employees, many of whom are concerned about TikTok’s uncertain future. The company is also reportedly working on a potential standalone app for US users, but it’s unclear if this contingency plan will be finalized amidst ongoing trade discussions between Trump and Beijing.
Source: www.theguardian.com
