New Delhi: ByteDance Ltd., the parent company of the popular social video platform TikTok, is reportedly initiating a buyback of up to $5 billion from investors, as disclosed by sources familiar with the matter. The offer, set at $160 per share, aligns with the price ByteDance extended to its employees in November. Despite being approximately 11% lower than the 2022 investor offering, this valuation would still position ByteDance among the 40 most valuable public companies globally and the third in China, trailing Tencent Holdings Ltd. and Kweichow Moutai Co.
Based in Beijing, ByteDance has emerged as a prominent player in China’s internet landscape, alongside Tencent and Alibaba Group Holding Ltd. Leveraging the popularity of its social video services, the company has diversified into e-commerce and other sectors. However, ByteDance’s forays into gaming and virtual reality have faced challenges, leading the company to refocus on its core business, prominently led by TikTok and its Chinese counterpart Douyin.
Despite being recognized as the world’s most valuable startup, ByteDance has encountered obstacles in pursuing a high-profile initial public offering. These challenges include regulatory crackdowns on internet companies in China and increased scrutiny in key international markets. Notably, TikTok has faced bans in India and scrutiny in the United States, where concerns about national security have been raised.
In response to setbacks, ByteDance is adjusting its strategic approach, with a particular focus on its core business. The company, known for having some of the most downloaded apps in both the U.S. and China, generated revenue exceeding $80 billion in 2022. ByteDance’s decision to withdraw from the games business is being offset by the success of TikTok Shop and on-demand services in China.
In the Chinese market, competitors have experienced varying degrees of success in recovering from regulatory actions and economic challenges. Tencent has seen a 5% increase in its stock value over the past year, adapting to ByteDance’s competition through the expansion of its WeChat video service. PDD Holdings Inc., a platform operator, has surpassed Alibaba as China’s most valuable e-commerce company, capitalizing on its growth amid a turbulent reorganization faced by its elder rival.