ByteDance IPO: what to know and how to buy shares

When could the ByteDance IPO take place?

ByteDance’s Initial Public Offering (IPO) was first rumoured during the pandemic heyday of 2021 before being delayed by Chinese regulators. For context, ByteDance noted in 2020 that subsidiary TikTok Global will have its own US IPO at some point too, with both companies potentially listed on either the NYSE or NASDAQ.

However, there is now significant friction given Trump’s election victory. The incoming President plans to impose tariffs on Chinese products and has at points been a cheerleader on restricting TikTok in the US.

Meanwhile ByteDance’s two key apps, TikTok and Douyin, have not yet separated operationally — leaving both the US and China unhappy with the corporate set-up as the two apps share the same algorithm. And on the Chinese side, the government is becoming increasingly strict on big tech.

However, money tends to find a way, and a ByteDance IPO could raise significant capital to help the company with its expansive growth plans soon.

How to buy ByteDance shares if the company lists

If ByteDance lists in the US, you can buy their shares from £0 commission with us. That's the rate if you've traded 3+ times in the previous calendar month, otherwise our standard fee is £10.

You'll be able to invest in ByteDance right away on the day of the listing.

1. Do your research on IPOs
2. Open a share dealing account
3. Search for ByteDance on our share dealing platform
4. Choose the number of shares or amount of money you wish to invest
5. Place your deal

When dealing shares, you own the stock and become a shareholder in the company. You'll profit if the share price rises above the point at which you bought, or potentially from any dividends paid. You could get back less than you put in.

You can also trade the ByteDance IPO using leverage through a variety of products with us. This means you could gain or lose money quickly and could end up losing more than your initial deposit. This is higher risk and requires thorough risk management.

Read more about IPOs:

• Upcoming IPOs to watch
• How to trade or invest in IPOs
• Trading IPOs on our platform
  

What will ByteDance be valued at and what will the share price be?

While not all finances are public, Bloomberg analysis indicates that ByteDance saw profits rise by a substantial 60% year-over-year in 2023, faster than platform stock competitors Tencent and Alibaba. Bloomberg cited ‘people familiar with the matter’ saying that earnings before interest, tax, depreciation and amortisation (EBITDA) increased from circa $25 billion in 2022 to more than $40 billion — while sales grew from $80 billion to $120 billion.

More recently, The Information reported that between January and June 2024, citing ‘two people with knowledge of the company’s first-half results,’ that the share of ByteDance revenue stemming from its international business is up about 4% compared to the first half of last year — though the lion’s share of revenue still comes from Chinese e-commerce and social shopping apps Douyin and Toutiao.

The same publisher claims that revenue in the first half rose by 35% year-over-year to $73 billion, but that the rate of revenue growth was 5% slower than it was during the same period a year ago. This makes international expansion all the more important, which could make it likely there will be compromises in the US.

In November 2024, Reuters quoted multiple sources stating that ByteDance was valuing itself at circa $300 billion, after it reached out to investors offering a price of $180.70 per share in a new buyback program. For perspective, the company offered to buy back around $5 billion worth of shares from investors at a price of $160 each, valuing the company at $268 billion in December 2023.

You may expect a share price launch point in the hundreds of US dollars, in line with big tech US stocks like Meta Platforms or Amazon.

What is ByteDance’s business model?

ByteDance is a well-known Chinese technology company that has become a household name in the west primarily due to the success of its video-sharing platform, TikTok. The company remains headquartered in Beijing.

Other than TikTok, ByteDance operates a Chinese version of the app called Douyin, alongside Toutiao, a news aggregator app that curates news articles based on user interests — and Xigua, which focuses on long-form video. Smaller apps include virtual reality platform PICO, video editing app CapCut and Lark, a productivity suite for business — though Bytedance controls many more.

The company has a heavy focus on developing artificial intelligence algorithms which personalise content feeds for users, though this is a source of serious contention. It also uses machine learning to analyse and improve on content feed tailoring, and extracts insights of user preferences on a wider scale using cutting edge data science.

ByteDance has focused on its international expansion in recent years, especially in the wake of the explosive success of TikTok, which boasts over one billion monthly active users. The lion’s share of revenue is assumed to come through advertising on its platforms — in common with western competitors.

It’s hard to understate the impact TikTok has had on social media and marketing. The newcomer has changed the way people consumer video content and has arguably completely altered the advertising market. It’s also welcomed a sea change in digital culture, especially given the data insights which allows the parent company to innovate based on user preferences.

While it’s worth noting that most analysts consider that TikTok only generates circa 5% of the parent’s total revenue, ByteDance has managed to expand beyond China, a feat which competitors have failed to achieve. And international expansion is where the future growth is likely to derive from, which could allow ByteDance to grow larger than its domestic-bound rivals.

Why are there ByteDance ethical concerns?

ByteDance, particularly through its flagship app TikTok, continues to face a number of ethical and political concerns — though it’s worth noting that many competitors share some of the same issues.

Perhaps the key problem is concerns that ByteDance may be compelled to share user data with the Chinese government due to its legal obligations. This is a clear security and user data privacy concern, and there have also been accusations that TikTok’s algorithm can amplify harmful or incorrect content, potentially leading to the spread of misinformation.

Like all social media platform operators, ByteDance struggles to moderate the overwhelming volume of content created every day, and this is doubly difficult for the Chinese business given allegations of censorship of subjects critical of the Chinese Communist Party, or other sensitive topics.

The US has valid national security concerns, and a law signed by outgoing President Joe Biden in April 2024 leaves ByteDance until mid-January 2024 to sell TikTok or face a ban on the app in the US. The app is already banned in India. While ByteDance has sued in Federal court to block this ban on First Amendment grounds, the US Department of Justice argues that national security takes precedence.

There are also concerns that excessive TikTok usage is damaging public mental health, especially among young people — including concerns that the app is addictive and is able to manipulate user behaviour. ByteDance is facing dozens of lawsuits across multiple US states over this issue but has implemented stricter content moderation policies and increased transparency about its data practices.

While incoming President Donald Trump was previously vocal in his opposition to TikTok, he u-turned in the recent election campaign, saying that he would prefer to ‘save TikTok.’ However, the ‘ban or sale’ comes into force a day before his inauguration, and therefore it is likely IPO plans will be delayed until the horizon is more certain.

ByteDance-related investments

While you wait for the ByteDance IPO, there are several publicly listed investments to consider.

Meta Platforms, owner of Facebook, Instagram and WhatsApp, is a popular choice — as is Alphabet, which owns both Google and YouTube. Facebook’s ‘Reels’ and YouTube’s ‘Shorts’ formats are similar to TikTok, as is the focus on online social. Amazon is perhaps the best comparator is you wish to invest in e-commerce.

If you prefer Chinese rivals, Alibaba and JD.com are e-commerce market leaders and compete with ByteDance’s Douyin for custom.

For those seeking diversification, the Global X Social Media Index ETF is a popular choice, as it seeks to provide exposure to social media companies around the world. With an expense ratio of 0.65%, top holdings include Meta, Tencent and Naver.

ByteDance IPO summed up

• ByteDance’s Initial Public Offering was first rumoured during the pandemic heyday of 2021 before being delayed by Chinese regulators.
• There are several ethical concerns with the company, leaving ByteDance until mid-January 2024 to sell TikTok or face a US ban
• ByteDance is famous in the west for owning TikTok, though the app only generates a small portion of overall revenue.
• Bloomberg sources indicate that the company’s sales grew from $80 billion in 2022 to $120 billion in 2023