A stake of over $100 million was acquired by Abu Dhabi’s G42, an artificial intelligence firm, in ByteDance, the parent company of TikTok, resulting in a valuation of $220 billion for ByteDance.
This valuation is significantly lower than the $300 billion valuation set by TikTok’s owner in a recent share buyback program.
G42 acquired a stake of over $100 million from existing investors through its 42XFund in the past few months. Another fund also invested in ByteDance at a value of $225 billion shortly after, according to a person familiar with the matter.
The fluctuation in ByteDance’s valuation is due to the uncertainty surrounding TikTok’s future after US lawmakers raised national security concerns and signaled their intention to potentially ban the app. TikTok’s leadership is reportedly considering separating from its Chinese parent company to address these concerns as a last resort.
ByteDance, a Chinese app developer, has achieved great success abroad and is among a few Chinese companies to hit it big overseas. Other companies in this category include Shein Group, AliExpress, and PDD Holdings’ Temu app.
What is the future of TikTok in US?
ByteDance’s flagship app, TikTok, has attracted advertisers targeting a younger demographic and has gained popularity as a platform for selling goods to social media users through livestreams worldwide.
However, concerns in Washington have arisen due to the app’s popularity, and a bipartisan bill was recently endorsed by the White House that could allow the President to ban or force the sale of TikTok.
Despite ByteDance exploring IPO options, including in Hong Kong and the US, global market volatility has made this unlikely in the near future. In 2022, TikTok alone generated an estimated $12 billion in revenue, so ByteDance, which is backed by SoftBank Group and Temasek Holdings, is not in urgent need of cash.
Last year, the Beijing-based company offered to repurchase $3 billion worth of its own shares at a valuation of around $300 billion, providing a way for existing backers like Susquehanna International Group and Sequoia Capital to profit from their investments.
The future of TikTok in the US is uncertain. In 2020, the Trump administration ordered ByteDance to divest TikTok’s US operations due to concerns over national security and potential data breaches.
ByteDance subsequently struck a deal with Oracle and Walmart to form a new company called TikTok Global, with the majority ownership held by American companies. However, the Biden administration has put the deal on hold and is currently reviewing the situation.
Meanwhile, there are ongoing legal battles and appeals regarding the potential ban of the app. Ultimately, the future of TikTok in the US will depend on the outcome of these legal and regulatory proceedings.