TikTok owner ByteDance sets valuation at over $330 billion as revenue grows, sources say

HONG KONG: ByteDance, the owner of short-video app TikTok, is set to launch a new employee share buyback that will value the Chinese technology giant at more than US$330 billion, driven by continued revenue growth, said three people with knowledge of the matter.

AI Brief

ByteDance plans a fall buyback at US$200.41/share, up 5.5%, reflecting strong revenue growth and financial stability.
The company topped Meta in Q2 revenue with US$48B, but faces US pressure to divest TikTok due to national security concerns.
A US investor consortium may acquire TikToks US assets, while ByteDance prepares a potential standalone app for US users.

The company plans to offer current employees US$200.41 per share in the repurchase programme, the people said, up 5.5% from US$189.90 each it offered them about six months ago which valued ByteDance at roughly US$315 billion.

The buyback is expected to be launched in the autumn.

The latest buyback at a higher valuation will come as ByteDance consolidates its position as the world's largest social media company by revenue, with its second-quarter revenue up 25% year-on-year, the people said.

That jump resulted in the company's second-quarter revenue hitting about US$48 billion, two of the people said, most of which is from the Chinese market as it continues to face political pressure to divest its U.S. arm.

The revised valuation and the second-quarter revenue growth details had not been reported previously. The sources declined to be named as they were not authorised to discuss the information with media.

ByteDance did not immediately respond to a request for comment.

In the first quarter, ByteDance's revenue rose to more than $43 billion, making it the world's No. 1 social media company by sales, topping Facebook and Instagram owner Meta's US$42.3 billion in that period.

Both firms maintained sales growth above 20% in the second quarter, helped by robust advertising demand.

ByteDance's biannual buybacks allow employees of the privately held company to cash out some holdings and reflect a balance sheet strengthened by its expanding domestic and international businesses.

It is increasingly common for late-stage private companies to conduct regular buybacks to retain and provide liquidity to employees without an exit such as an initial public offering.

Many, including SpaceX and OpenAI, use external investor capital to fund these programmes. ByteDance has been an outlier, steadily using its own balance sheet in a signal of financial flexibility and healthy margins.

ByteDance is also widely regarded as one of China's artificial intelligence leaders, having invested billions of dollars in buying Nvidia chips, building AI-related infrastructure and developing its models.

TIKTOK SALE

Despite outpacing Meta on revenue this year, ByteDance's valuation remains less than a fifth of Meta's roughly US$1.9 trillion market capitalisation - a gap analysts attribute largely to political and regulatory risks in the U.S.

ByteDance faces intense pressure in Washington, where lawmakers have raised national security concerns over its Chinese ownership.

Congress last year passed a law requiring ByteDance to divest TikTok's U.S. assets by January 19, 2025 or face a nationwide ban of the app, which has 170 million U.S. users.

President Donald Trump has granted TikTok multiple reprieves and last week extended the deadline for the company to divest its U.S. assets to September 17. He said U.S. buyers were lined up for TikTok and the deadline could be pushed back again.

Some lawmakers have criticised the delay, arguing his administration is flouting the law and ignoring national security concerns related to Chinese control over TikTok.

ByteDance is profitable as a company, but TikTok's U.S. business has been loss-making so far, said two of the people. TikTok did not respond to a request for comment from Reuters.

If the sale of TikTok's U.S. business is finalised, it is expected to be owned by a joint venture formed by an American investor consortium and ByteDance, which will maintain a minority stake.

The consortium, which has emerged as the frontrunner, includes ByteDance's current shareholders Susquehanna International Group, General Atlantic and KKR as well as Andreessen Horowitz, Reuters previously reported.

Blackstone recently dropped out of the consortium after several delays in the deal's timeline.

The new ByteDance buyback could help bolster morale among its U.S.-based staff, some of whom are concerned about TikTok's uncertain future.

TikTok has also been working on preparing a potential standalone app for U.S. users, sources told Reuters earlier, though it remains unclear if any contingency plan will be finalised amid Trump's ongoing trade talks with Beijing.