ByteDance's valuation slumps by a quarter in stock buyback - source

The ByteDance logo is seen at the company’s office building in Shanghai, China July 4, 2023. REUTERS/Aly Song/File Photo Acquire Licensing Rights

Oct 2 (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.

Reporting by Krystal Hu in San Francisco, Niket Nishant and Samrhitha Arunasalam in Bengaluru; Editing by Shinjini Ganguli and Edwina Gibbs

Our Standards: The Thomson Reuters Trust Principles.

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Krystal reports on venture capital and startups for Reuters. She covers Silicon Valley and beyond through the lens of money and characters, with a focus on growth-stage startups, tech investments and AI. She has previously covered M&A for Reuters, breaking stories on Trump’s SPAC and Elon Musk’s Twitter financing. Previously, she reported on Amazon for Yahoo Finance, and her investigation of the company’s retail practice was cited by lawmakers in Congress. Krystal started a career in journalism by writing about tech and politics in China. She has a master’s degree from New York University, and enjoys a scoop of Matcha ice cream as much as getting a scoop at work.

Niket Nishant reports on breaking news and the quarterly earnings of Wall Street’s largest banks, card companies, financial technology upstarts and asset managers. He also covers the biggest IPOs on U.S. exchanges, and late-stage venture capital funding alongside news and regulatory developments in the cryptocurrency industry. His writing appears on the finance, business, markets and future of money sections of the website. He did his post-graduation from the Indian Institute of Journalism and New Media (IIJNM) in Bengaluru.

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