- lByteDance’s $5 billion share buyback programme at $160 per share shows commitment to early investors and employees.
- lByteDance’s valuation has fallen about 10% in a year, raising questions about its future.
- lRecent is making business adjustments, such as shrinking its games division.
ByteDance, parent company of TikTok, plans to spend up to $5 billion on a stock buyback program, offering shareholders $160 per share, valuing the company at around $268 billion. This move allows shareholders to cash out of their holdings.
Large-scale share buyback programme
ByteHopper is the parent company of TikTok and one of the world’s most valuable startups. The company recently made headlines when it announced a massive $5 billion share buyback programme, allowing shareholders to cash in their shares.
ByteDance offered its shareholders $160 per share, which, according to Chinese sources familiar with the matter, is the same price as the buyback of ByteDance’s employee options in October this year. In fact, this represents a valuation of $268 billion. This buyback strategy is designed to give early investors and employees a chance to cash out. This is undoubtedly good news for the employees who have consistently supported the company, especially in the absence of traditional liquidity events such as IPOs or acquisitions.
Also read: TikTok is reshaping how we experience live events for the better
Valuation change
However, the move also hints at some of the challenges facing the tech giant. In fact, this is not the first time ByteDance has undertaken a major share buyback, the last being in November last year when the purchase price was no less than $177 per share for a total value of no more than $3 billion, giving the company a valuation of no more than $300 billion. Compared to the initial $300 billion valuation, the valuation of Byte has fallen by approximately 10% in one year.
According to ByteDance’s articles of association, some preferred shareholders have the right to require the company to redeem their shares in cash from November 2022 if the company is not listed. We don’t know whether this takeover is the result of a deliberate move by the investors or the company. Some experts say it should be seen as a sign that ByteDance is trying to go public.
But at the moment ByteDance is still non-committal about going public.
Massive business contraction
While the valuation has fallen, ByteDance’s business exploration has also undergone adjustments in the recent past. In November this year, the company’s game brand Nuverse also opened a large-scale business contraction – for games that have been launched and are performing well, it will seek to divest under the guarantee of operation, including Moonton, which was previously purchased at a high price of $4 billion. However, it must find a buyer within 3 months, which is “tantamount to a death sentence”.
ByteDance issued an official notice and completed the signing of all termination contracts, and was given only one day to do so. It was revealed that Asahi Lightyear currently employs more than 2,000 people, with 700 to 1,000 people expected to be made redundant directly.
In a tech world full of uncertainty, ByteDance’s $5 billion share buyback programme is a clear signal of its financial strength and commitment to its stakeholders. At a time when TikTok is struggling through relentless global scrutiny and internal issues, both the aggressive share buyback and the timely suspension of its gaming operations demonstrate ByteDance’s proactive approach to meeting challenges, embracing change and ensuring its shareholders have the opportunity to benefit from the company’s growth. We look forward to ByteDance’s next moves and the impact they will have on the company’s future development.
