ByteDance’s valuation slumps by a quarter in stock buyback

BEIJING (Reuters): China’s ByteDance is buying back shares from U.S. employees in a deal that values the TikTok parent company at $223.5 billion, about 26% lower than a valuation a year earlier, a source familiar with the matter told Reuters on Monday.

Share buybacks for employees allow them to vest without waiting for the company to list in the stock market.

Last year, ByteDance was valued at $300 billion in a buyback program offered to its non-U.S. employees. Since then its U.S. operations have dropped a rule requiring a “liquidity event”, such as an IPO or company sale, as a condition for the vesting to occur. The rule had been in place for tax reasons.

ByteDance is looking to buy at least $300 million worth of stock from current and former U.S. employees at $160 per share, the source said.

The source was not authorised to speak to media and declined to be identified. ByteDance did not immediately respond to a Reuters request for comment. The Information first reported the share buyback price.

Many late-stage startups have seen their valuations slide in the past two years as sharp interest rate hikes have led to far less capital in the private investment market.

The deal comes at a time when TikTok is facing calls for a nationwide ban from some U.S. lawmakers over concerns about potential Chinese government influence over it. ByteDance has denied the allegations.

TikTok CEO Shou Zi Chew was also grilled in a congressional hearing in March where U.S. lawmakers expressed concerns about the impact of the content on the platform on children’s mental health.

The Wall Street Journal reported on Monday that ByteDance turned an operating profit of nearly $6 billion in the first quarter of 2023, nearly doubling from a year earlier.