By Echo Wang and Chandni Shah
(Reuters) – TikTok’s parent company ByteDance has placed a hefty self-valuation at approximately $300 billion as it recently reached out to investors regarding a significant share buyback initiative. This development came to light through insights from two individuals knowledgeable about the situation and a document reviewed by Reuters.
In these discussions, ByteDance proposed a buyback price of $180.70 per share, reflecting its intent to reassure investors of its ongoing value and market position.
The current buyback offer marks an impressive increase of 12.9% from the previous per-share price of $160 in its last buyback initiative, showcasing a strategic move to enhance investor confidence.
This valuation information was initially disclosed in a report by the Wall Street Journal, underscoring the company’s fiscal strategies amidst various external pressures.
According to one source, ByteDance does not have any plans for an Initial Public Offering (IPO) on the horizon. Instead, the buyback program is being positioned as a vital strategy to bolster the company’s liquidity during uncertain market conditions.
Notably, this marks ByteDance’s third share buyback program since it initiated such efforts in 2022. The company’s decision to engage in share buybacks has been a consistent theme in their financial strategy, aimed at stabilizing investor relations and delivering shareholder value.
Back in December 2023, ByteDance had offered to repurchase approximately $5 billion worth of shares from investors at a price of $160 each, leading to a previous valuation of the company at $268 billion, illustrating its ambitious financial maneuvers.
Sources indicated that ByteDance was committed to executing this buyback program irrespective of the U.S. presidential election outcomes, emphasizing its focus on long-term stability rather than short-term political fluctuations.
Despite generating significant revenue, with a remarkable growth of 30% last year bringing total earnings to $110 billion, ByteDance is currently navigating complex legal battles regarding its U.S. assets, which adds layers of uncertainty to its operational strategy.
Following the enactment of a law by U.S. President Joe Biden on April 24, ByteDance is now faced with a deadline until January 19 to divest from TikTok or potentially encounter a ban. This decision stems from national security concerns surrounding Chinese ownership of the platform, which the White House aims to address without an outright prohibition of TikTok.
In response to this legislative pressure, TikTok and ByteDance filed a lawsuit in May in U.S. federal court, aiming to challenge the constitutionality of the law signed by Biden.
Both TikTok and ByteDance opted not to provide any comments regarding these ongoing developments.
(Reporting by Echo Wang in New York and Chandni Shah and Mrinmay Dey in Bengaluru; Editing by Alistair Bell and Lincoln Feast.)
How might ByteDance’s decision to prioritize share buybacks over an IPO influence their long-term growth strategy?
**Interview with Financial Analyst Jessica Lee on ByteDance’s Share Buyback Initiative**
**Editor:** Today, we have financial analyst Jessica Lee joining us to discuss ByteDance’s recent self-valuation and their significant share buyback initiative. Jessica, thank you for being here.
**Jessica Lee:** Thank you for having me!
**Editor:** So, ByteDance has reportedly placed a self-valuation of around $300 billion. What do you think this means for the company?
**Jessica Lee:** This valuation reflects ByteDance’s attempt to establish confidence among its investors amid a fluctuating market environment. By reaching out with a buyback offer, they’re signaling that they believe in their long-term value and profitability, even when external pressures loom.
**Editor:** They proposed a buyback price of $180.70 per share, which is a significant increase from the last offer. How does this strategy play into their overall financial picture?
**Jessica Lee:** Exactly. The increase of 12.9% from the previous buyback price indicates that ByteDance is not only trying to reassure investors but is actively taking steps to enhance their financial standing. By repurchasing shares, they can reduce the number of shares available on the market, which could, in turn, bolster the share price and investor confidence.
**Editor:** Interesting. We’ve heard ByteDance has no immediate plans for an IPO. Why might they be choosing a buyback program instead?
**Jessica Lee:** Their decision to focus on a buyback program instead of pursuing an IPO suggests that they want to maintain control and flexibility in a challenging economic climate. By enhancing liquidity through buybacks, they could strengthen their balance sheet and prepare for future opportunities without the volatility and scrutiny that comes with going public.
**Editor:** ByteDance has launched multiple buyback initiatives since 2022. What does this tell us about their financial strategy moving forward?
**Jessica Lee:** It indicates a consistent strategy aimed at stabilizing their market position. Regular buybacks suggest that ByteDance is committed to creating shareholder value and fortifying its financial resilience. They are clearly keen on managing investor expectations and communicating confidence in their operational capabilities amidst uncertainty.
**Editor:** Jessica, thank you for your insights on ByteDance’s strategies. It will be interesting to see how this unfolds in the coming months.
**Jessica Lee:** Thank you! I’m looking forward to it.
