TikTok maker, ByteDance, has to spend a share buyback with a value of up to $3 billion from investors.
The Chinese tech giant detailed its plan to shareholders via an email at around $177 per share. The setup price would value ByteDance at around $300 billion, down sharply from its peak of $400 billion.
The company is also looking to extend its current stock-raising plan by 10 years, the report noted. This was after ByteDance CFO Julie Gao informed her staff in late August that the company had no plans to go public any time soon.
ByteDance is short of stock.
ByteDance is also expanding its influence in various industries. Recent efforts include expanding the TikTok Shop e-commerce branch across Southeast Asia and testing a food delivery service in China through Douyin, TikTok’s domestic partner.
ByteDance is a content creation and discovery platform that allows people to experience content powered by AI technology. ByteDance is best known for its products TikTok, Vigo, Toutiao, and TopBuzz.
According to sources, ByteDance has been exploring conducting an initial public offering in Hong Kong, but the company said last April it had no immediate plans. The company’s board of directors will bring its share valuation proposal up to $176.9 per share to shareholders later this month and plan to buy back in the next 2-3 months, one with direct knowledge said.
Recent deals in the private equity secondary market value the company at $300 billion or less, the person and a separate source said. That compares with the $300 billion to $400 billion valuation received in the market last year. Even at $300 billion, it’s one of the world’s most valuable private companies, according to CB Insights.
Slowing economic growth, largely due to COVID-19 restrictions, as well as Beijing’s regulatory tightening of the tech sector have dampened the earnings outlook for many Chinese internet companies. Last month, the company cut employee stock options prices by 20% compared to its 2021 plan.
Revenue growth in 2021 also slowed to 70% from more than 100% a year earlier. In addition to TikTok, ByteDance’s other popular apps include the Chinese equivalent of Douyin and news aggregator Jinri Toutiao. In 2021, users spent about $2.3 billion on TikTok and the iOS version of Douyin, according to SensorTower.
