ByteDance Stock Is Very Cheap—for Good Reason

You might have missed it, with all the drama this week about Sam Bankman-Fried’s trial (for our deep dive, see here) and the latest updates from the world of AI, but we got a detailed update on ByteDance’s robust financial performance. And what that told us is that shareholders in the parent company of TikTok have reason to be very frustrated. The value of the privately held Chinese tech giant is less than half what it would be if ByteDance was a U.S. company. We're calculating ByteDance's value based on the price the company is offering in its upcoming employee share buyback, although the stock’s value in secondary market trading appears to be even lower, judging by Caplight data.

As we reported, ByteDance’s employee tender offer of $160 a share values the company at $223 billion. That translates to an enterprise value—subtracting the net cash—of about $204 billion, or 2.4 times 2022 revenue. In contrast, Meta Platforms, owner of Facebook and Instagram, is trading at 6.6 times 2022 revenue. Even Snap, whose business hasn’t yet recovered from the ad downturn and Apple’s ad-targeting changes, is trading at a higher multiple of last year’s revenue, at around 3. If ByteDance was trading in line with Meta, its shares would be priced closer to $420.