TikTok owner ByteDance offers to buy back shares from employees at unchanged price amid political headwinds, stalled IPO

The steady buy-back price is being offered at a time when the company’s valuation is in decline, with a recent investment valuing the company at around US$220 billion, down from a peak valuation of US$400 billion in 2021
The unchanged buy-back price interrupts an earlier streak of higher repurchase prices offered at each of the past four offers made between 2021 and 2022

ByteDance

Coco Fengin Beijing

Published: 3:58pm, 17 Apr 2023

Why you can trust SCMP

TikTok owner ByteDance has embarked on a new share option buy-back programme allowing employees to offload holdings, even as it faces intensified political backlash overseas, two people familiar with the matter told the Post.

The privately-held company’s latest stock repurchase offer of US$155 per share, which is at par with the price offered during the last round of buy-backs made in October, gives employees a chance to encash their stock options even without an initial public offering (IPO).

Chief financial officer Julie Gao told employees last August that the company had no plans to go public.

The steady buy-back price comes at a time when the company’s total valuation is in decline. A recent investment by Abu Dhabi artificial intelligence firm G42 valued ByteDance at around US$220 billion, Bloomberg News reported last month, down from a peak valuation of US$400 billion in 2021.

04:16

‘I think there might be a bias’: Young Americans address China fears amid potential TikTok ban

This is a rare instance of the company not raising its buy-back price since it began making such offers in 2017. The programme, which traditionally takes place twice a year in April and in October, has seen a higher offer price in each of the past four rounds between 2021 and 2022.

However, the latest round which began last week, raised the buy-back offer for those who had already left the company. The price was increased to US$124, up from the previous round’s US$116, one source said.

‘A political performance’: Chinese netizens slam TikTok hearing in US

ByteDance did not immediately respond to the Post’s request for comment.

Strong cash flows have allowed ByteDance, which does not disclose its financial performance and equity structure in detail, to repurchase shares from employees and early investors. In September 2022, ByteDance made a US$3 billion repurchase from investors even as its IPO plans remained uncertain.

ByteDance posted robust financial results in 2022, according to media reports. Its pre-tax profit surged nearly 80 per cent year on year to US$25 billion, The Financial Times reported, while its revenue jumped over 30 per cent to US$80 billion, according to Bloomberg News.

Its flagship app TikTok has been facing mounting pressures in the West. The app was banned on US federal devices over data concerns and Montana became the first US state last week to pass a bill that makes it illegal to download the app in the state.

Threatened by a wider ban from the Joe Biden Administration, TikTok chief executive Chew Shou Zi testified last month at a congressional hearing over data security and other concerns due to the social media app’s ties to China. An official decision on the ban is awaited.

Oracle, a US-based company that provides cloud infrastructure for TikTok’s US user data, is “reportedly auditing TikTok’s algorithms to ensure that US user data is safe from manipulation”, a US Congressional report said last month.

Post