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ByteDance valuation soars to $400bn as IPO talk intensifies

(ATF) ByteDance, the parent company of popular short video app TikTok, has reportedly set in motion an initial public offering (IPO) for Hong Kong with a US$400 billion valuation.

The valuation of the Beijing-based start-up is swelling quickly as the market capitalisation of its rival Kuaishou has almost doubled since its IPO in Hong Kong in February, reaching HK$1.08 trillion ($139 billion).

And the new valuation almost triples ByteDance’s US$140 billion valuation after its series C fundraising in March 2020, according to data from analytics firm CB Insights. It would also make ByteDance the third-largest Internet giant in China after Tencent and Alibaba.

Read more: Huawei says its first self-driving car ‘HI’ surpasses Tesla

A source also confirmed to Asia Times Financial that ByteDance has more than doubled its internal valuation in a new stock option plan for employees, who are being offered the option of exchanging their bonuses for ByteDance’s untraded stocks at US$126 per share – more than twice the amount of last year.

The new price reflects a 30% discount from an external price of US$180 per share, Chinese business news portal Jiemian.com reported on Tuesday.

Meanwhile, China Securities News reported on Wednesday morning that ByteDance has set its Hong Kong IPO in motion by submitting an underwriter engagement letter to Hong Kong stock exchange, citing people with knowledge of the matter.

The report didn’t mention if ByteDance would list its entire business that includes TikTok, its Chinese sibling Douyin, news aggregator Jinri Toutiao, and video platform Xigua Video. However, China Securities News later removed the article from its website.

MEDIA SHARES SURGE

Shares in companies in the media and entertainment sectors soared on Wednesday afternoon, including Huawen Group, BlueFocus and Yinli Media.

ByteDance last month hired former Xiaomi executive Shou Zi Chew for a newly-created chief financial officer role, seen as a sign an IPO could be nearer. A report by Reuters two weeks ago said ByteDance was considering an IPO for Douyin in New York or Hong Kong.

ByteDance, which last year announced over 100 million of TikTok active users in the US – equalling 37% of America’s mobile internet users – recorded revenues totalling 240 billion yuan (US$36.8 billion) in 2020, according to 36Kr. 

Among them, advertising sales accounted for 175 billion yuan and livestreaming services generated 45-50 billion yuan. E-commerce sales were 6 billion yuan, and revenues from gaming and education were about 5 billion yuan and 3 billion yuan, respectively.

US CRACKDOWN

Despite the US crackdown, ByteDance’s TikTok app remained the most downloaded non-gaming app worldwide in March, according to data released by Sensor Tower. 

TikTok, as well as Douyin, had 58 million downloads in March around the world, the report said. About 10% of the app’s downloads took place in the US in March, while about 11% (Douyin) took place in China. 

TikTok and Douyin reportedly contribute to about 60% of ByteDance’s advertising revenue.

Former US President Donald Trump issued an executive order forcing ByteDance to sell TikTok or have it banned from use in the US, but the deadline for the sale passed with no action as Trump stepped down, leaving issue to his successor Joe Biden. 

US Commerce Secretary Gina Raimondo said recently that the Biden administration is still “reviewing” how to address Chinese companies such as Huawei and TikTok, without giving a clear answer as to whether the Biden administration will force ByteDance to sell TikTok, according to US newspaper The Hill.

Also on ATF:

Time to upgrade! China clicks ‘agree’ on tech sector evolution 

Ant rejig cools investor appetite for revived IPO

Iris Hong

Iris Hong is a senior reporter for the China desk, and has special interests in fintech, e-commerce, AI, and electric vehicles. She began her career in 2006 and worked for Interfax News Agency and for PayPal before joining Asia Financial in July 2020. You can reach out to Iris on Twitter at @Iris23360981

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