ByteDance eyes $330B valuation in latest employee share buyback
What's the story
ByteDance, parent company of TikTok, is gearing up for a new employee share buyback. The move will value the Chinese tech giant at over $330 billion. This comes on the back of continued revenue growth and a 25% year-on-year (YoY) increase in its second-quarter revenue. The company plans to offer employees $200.41 per share in this repurchase program, a 5.5% increase from the previous offer six months ago of $189.90 per share, which had valued ByteDance at about $315 billion.
Revenue growth
Revenue growth outpaces Meta
In the first quarter, ByteDance's revenue exceeded $43 billion, making it the world's top social media company by sales. This was more than Facebook and Instagram's parent company, Meta's $42.3 billion in that period. Both companies maintained a sales growth of over 20% in the second quarter, driven by strong advertising demand.
Buyback strategy
Biannual buybacks and financial flexibility
ByteDance's biannual buybacks give employees of the privately held company a chance to cash out some holdings. This strategy reflects a balance sheet bolstered by its growing domestic and international businesses. Unlike other late-stage private companies that use external investor capital for these programs, ByteDance has been using its own balance sheet, showing financial flexibility and healthy margins.
AI investments
Valuation gap and AI investments
ByteDance is also seen as one of China's leaders in artificial intelligence (AI), having invested billions in buying NVIDIA chips, building AI infrastructure, and developing its models. Despite its revenue surpassing Meta's this year, ByteDance's valuation is still less than a fifth of Meta's roughly $1.9 trillion market capitalization. Analysts attribute this gap largely to political and regulatory risks in the US.
Regulatory challenges
Regulatory challenges in the US
ByteDance is under intense pressure in Washington over national security concerns related to its Chinese ownership. Congress passed a law last year requiring ByteDance to divest TikTok's US assets by January 19, 2025, or face a nationwide ban. President Donald Trump has given TikTok several extensions, most recently moving the deadline to sell its us assets to September 17. He noted that potential US buyers are ready and suggested the deadline could be extended again.