The buyback gives a fresh benchmark for valuing Chinese tech and large private AI-linked companies. That could support sentiment toward listed Chinese internet peers and toward investors with ByteDance exposure, such as SoftBank. A 20% rise in the company’s own valuation suggests management is confident in its advertising and AI businesses despite the geopolitical risk around TikTok. Setting the price below some secondary-market marks also suggests a conservative approach, which may limit how far the news lifts valuations of comparable companies.
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Earlier:
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ByteDance is raising its own valuation by a fifth to about $400 billion but still pricing below what some outside investors have paid, a confident but cautious mark for one of the world’s biggest private companies.
Summary:
- ByteDance plans to buy back up to $6bn of shares from existing investors
- The buyback values the company at about $400bn, around 20% above the valuation used a year ago
- Valuations in past buybacks have risen steadily, from about $268bn in late 2023 to around $330bn last year
- A minority-stake deal late last year reportedly valued ByteDance at about $480bn
- The buyback gives investors a way to cash out of a company that has never listed
ByteDance, the Chinese owner of TikTok, plans to buy back up to $6 billion of shares from existing investors at a valuation of about $400 billion, The Information reported, citing a letter to shareholders and a person familiar with the matter. That is about 20% above the valuation used in the company’s previous buyback a year ago.
The rise fits the company’s recent pattern. ByteDance runs regular buybacks, which are a rare official price for one of the world’s most valuable private companies. Earlier reports show that price climbing steadily: from about $268 billion in late 2023, to around $300 billion a year later, to roughly $330 billion in last year’s round.
Even so, the new figure is below some outside valuations. A minority-stake deal late last year reportedly valued ByteDance at about $480 billion. That suggests the buyback price is set cautiously compared with what some investors have been willing to pay.
For shareholders, the buyback is a way to cash in their stake in a company that has never listed. The valuation reflects the strength of its core advertising business and growing interest in its AI work, including its Doubao chatbot.
The deal also comes in a busy week for AI valuations, with Anthropic set to price its IPO next week at around $1 trillion. Taken together, the two show how far private tech valuations have run. They also show how differently investors value an established profit-making platform and a fast-growing AI developer.
This article was written by Eamonn Sheridan at investinglive.com.