TikTok’s parent company ByteDance plans to spend $5 billion buying back stock from shareholders. This will bring its valuation to $268 billion.
As per recent reports, ByteDance, the parent company of TikTok, plans to spend about $5 billion buying back stock from its shareholders. This comes as the company has faced several setbacks in its journey to becoming publicly listed, including the economy back in China and regulatory issues in the United States.
ByteDance Buying Back Stock
Reports suggest that ByteDance will be offering $160 per share to current holders, which is the same amount it offered to its employees for its restricted unit stocks last month. This concerted effort seems to imply that the company is tightening the reins before a possible public listing.
Still, the company does not seem to have a definite deadline for buying back the stocks or pursuing a public listing. If ByteDance does succeed in buying back the $5 billion worth of shares, it will be valued at about $268 billion. While this is impressive, it is reportedly 10% less than what it was valued at just last year.
The company has also recently taken steps to wind down its gaming division. It launched its Nuverse gaming brand four years ago with a plan to enter the gaming space. At the time, ByteDance had hoped to compete with giants in the market like Tencent and invested billions of dollars in this venture.
This included paying $4 billion for Moonton, a mobile gaming company, in 2021 and is now looking to sell the company. Nuverse did have some success with titles like Crystal of Atlan but this wasn’t enough. ByteDance confirmed last month that it was cutting hundreds of jobs in its gaming division and while it will not fold up entirely, it will scale down operations.
For the shareholders who are being offered a buyback, this could be beneficial. Those who bought into the company early can make a profit from their shares. And considering the fact that ByteDance’s public listing seems a good while away, shareholders might not get another chance to sell for a long time.
It is also worth noting that the company’s reduced valuation and cutting back on its gaming division means that this is the best price they can get. Some shareholders might choose to cash out now while others might want to hold on to their assets.
After all, ByteDance still owns one of the biggest social media apps on the planet. It has faced some regulatory setbacks in the US, including plans to ban TikTok altogether, but has come out on top.
Regardless of how the buyback situation unravels, it is clear that ByteDance is gearing up for some structural changes over the next few months, the results of which will be interesting to see.