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TikTok Owner’s Value Exceeds $100 Billion in Private Markets

Lulu Yilun Chen, Vinicy Chan, Katie Roof and Zheping Huang

(Bloomberg) --

ByteDance Ltd.’s valuation has risen at least a third to more than $100 billion in recent private share transactions, people familiar with the matter said, reflecting expectations the owner of video phenom TikTok will keep pulling in advertisers.

Stock in the world’s most valuable startup has changed hands recently at a price that suggests its value has risen more than 33% from about $75 billion during a major round of funding two years ago, the people said, asking not to be identified because the matter isn’t public.

Some trades recently valued the Chinese company between $105 billion and $110 billion on the secondary markets, some of people said. It has also traded as high as $140 billion, one person said.

The trades are private transactions and may not fully reflect broader investor expectations. Stock in the secondary market is usually valued at a discount to primary shares since it’s less liquid and there are fewer financial details on company performance available to investors.

“The trading of ByteDance is reflective of the global wave of consumers who agree that ByteDance can displace Facebook as the leading social network,” said Andrea Walne, a partner at Manhattan Venture Partners who follows the secondary markets.

In the past decade, Bytedance is surpassed only by Alibaba Group Holding Ltd. and Ant Financial Services Group as companies that have traded at a higher premium in the secondary market, she added.

ByteDance has grown into a potent online force propelled in part by a TikTok short video platform that’s taken U.S. teenagers by storm. Investors are keen to grab a slice of a company that draws some 1.5 billion monthly active users to a family of apps that includes Douyin, TikTok’s Chinese twin, as well as news service Toutiao. That’s despite American lawmakers raising privacy and censorship concerns about its operation. This week, it poached Walt Disney Co. streaming czar Kevin Mayer to become chief executive officer of TikTok.

The company was in the very early stages of exploring a share sale abroad last year, people familiar have said. But any float remains a longer-term objective given ByteDance remains well-funded, the people added. ByteDance declined to comment on Wednesday. Its backers include SoftBank Group Corp., General Atlantic and Sequoia.

The Chinese startup in the ballpark of the market capitalizations of some of the world’s biggest public companies, ahead of rivals such as Twitter Inc. and Snap Inc. but still behind Facebook Inc. ByteDance -- whose TikTok remains the venue of choice for half a billion lip-syncing, dancing music video aficionados -- is now going head-to-head with Chinese internet leaders from Tencent Holdings Ltd. to Alibaba for user traffic and marketing dollars.

It’s also strengthening its operations in newer arenas such as e-commerce and gaming. ByteDance this year kicked off a wave of hiring it envisions hitting 40,000 new jobs in 2020, hoping to match Alibaba’s headcount at a time technology corporations across the globe are furloughing or reducing staff.

Longer term, the company will have to grapple with rising scrutiny from Washington. Two prominent senators have urged investigations into TikTok, labeling it a national security threat.

Read more: ByteDance Launches Global Hiring Spree With 10,000 New Jobs

(Updates with a quote, new details in the fifth paragraph. An earlier version of the story was corrected to reflect executive’s proper title.)

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