- TikTok ‘s parent ByteDance Ltd. generated more than $3 billion in net profit on last year’s revenue of over $17 billion.
TikTok ‘s parent ByteDance Ltd. generated more than $3 billion in net profit on last year’s revenue of over $17 billion, figures showing the world’s most valuable startup is still growing at a rapid rate, according to people familiar with the matter.
Last year’s revenue was more than double the company’s 2018 tally of about $7.4 billion, driven by phenomenal user traffic growth that draws advertisers away from Tencent Holdings Ltd. and Baidu Inc.
ByteDance has emerged as one of the most exciting success stories in the tech industry, an ambitious Chinese company challenging U.S. internet giants’ global domination. A family of apps that includes the TikTok short-video platform, its Chinese twin Douyin and the news service Toutiao draws some 1.5 billion active monthly users. The business poached Walt Disney Co. this month for streaming czar Kevin Mayer to become TikTok’s chief executive.
The company owes a great deal of its success to TikTok, now American teens’ online repository of choice for lip-synching and dance videos. The visionary business is also actively moving from gaming and quest to music into a multitude of new arenas. ByteDance could achieve an initial public offering valuation of between $150 billion and $180 billion, a premium compared to revenue of up to 20 percent to social media giant Tencent thanks to a broader global presence and a flourishing gaming company, estimated Ke Yan, Singapore-based analyst with DZT Research.
“Before ByteDance, none of the Chinese tech companies had achieved this degree of success in the global market,” he said, adding much debt to none of the social media firms. “The fact that ByteDance makes a profit, if true, and sits on a $6 billion cash pile means that it is not at all in a hurry to come onto the market to raise capital, and therefore less likely to offer IPO investors the shares at a more reasonable price.
ByteDance, led by Zhang Yiming, is becoming a credible competitor to Facebook Inc. and Alphabet Inc., the dominant American online giants. Facebook unit Instagram brought in about $20 billion in advertising revenue in 2019, Bloomberg previously reported. Google said last year their YouTube video unit reported ad revenue of $15.1 billion. Representatives of ByteDance were not responding to a request for comment.
That success came despite American lawmakers raising concerns about censorship and privacy. Republican Senator Tom Cotton and Senate Minority Leader Chuck Schumer urged an investigation into TikTok last year in a rare bipartisan effort in Washington, which labels it a national security threat.
In newer markets such as e-commerce and gaming, ByteDance is expanding its operations. This year, it kicked off a wave of hiring and plans to hit 40,000 new jobs in 2020, hoping to match the e-commerce giant Alibaba Group Holding Ltd.’s headcount at a time when technology corporations around the globe are furloughing or reducing staff.
Backed by SoftBank Group Corp., General Atlantic, and Sequoia, ByteDance is already the most valuable startup in the world, according to researcher CB Insights. In the secondary markets, Bloomberg News previously reported that some private trades recently priced the Chinese business between $105 billion and $110 billion. It has also traded as high as $140 billion, said one person, making it one of the most valued private firms of all time.