Potential TikTok deal boosts ByteDance valuation as investor confidence grows

Published Fri, Sep 19 20253:01 AM EDTUpdated An Hour Ago

Evelyn Cheng @in/evelyn-cheng-53b23624 @chengevelyn

Anniek Bao @in/anniek-bao-460a48107/@anniekbyx

Key Points

Investor conviction in ByteDance's potential has deepened, with its valuation rising, reflecting growing confidence in the country's tech capabilities.
ByteDance may still be "largely undervalued" when compared against U.S. tech giants such as Meta, Wayne Shiong, co-founder and venture partner at China Growth Capital.

Investor conviction in ByteDance's potential has climbed since Washington and Beijing this week reached a framework agreement on the long-contested future of TikTok in the U.S., several dealmakers told CNBC. Existing shareholders are not planning to sell in the wake of the TikTok deal, said LU Shihui, partner at Envision Capital which has facilitated investments in ByteDance, adding that the company's valuation had already been rising for the past few months. While certain deals have valued ByteDance at $300 billion to $350 billion, the latest figure is $400 billion, significantly higher than around $230 billion seen earlier this year, LU said. This is a signal that investors are holding on for more gains and not panic-selling as they did in February, she said in Mandarin, translated by CNBC. That was around the time when ByteDance first faced pressure from the U.S. to sell TikTok's local operations , or shut down the app in the country. The Chinese tech company now faces a Dec. 16 deadline to divest the app — the fourth time it has been extended this year by U.S. President Donald Trump. Investors have been holding on to their shares with few willing to sell, according to a private share placement agent, who requested anonymity for privacy concerns. Interested buyers, from whom she received orders, have raised the valuation to around $330 billion, but "no one wants to let go of their investment in ByteDance now," the person said. In its latest employee share buyback program in August, ByteDance valued itself at more than $330 billion, Reuters reported , up slightly from the $315 billion valuation in its prior stock repurchase program in February. Valuations of unlisted firms tend to vary widely as secondary share sales are negotiated privately, but ByteDance's secondary share deals over the past three months have consistently valued the company between $315 billion and $320 billion, the person said. After the latest round of talks with the U.S. in Madrid earlier this week, China said the two sides had reached a consensus on licensing the app's algorithm and addressing issues on managing U.S. user data. Exact details on how this would work haven't been finalized or released. But Beijing also warned that the U.S. should not expect China to "accommodate" its concerns while "suppressing" Chinese companies. Back in 2023, China said it would " strongly oppose " a forced sale of TikTok. Trump said he expects to speak with China's President Xi Jinping on Friday to finalize the deal details. The Chinese side has yet to confirm whether the call will happen. "If the sale is finalized, there will likely be even more interested buyers due to increased certainty," said Emily Zheng, senior VC analyst at PitchBook. ByteDance and TikTok did not respond to CNBC's request for comments. Conviction grows ByteDance is China's most valuable unicorn , according to CBInsights. As the Beijing-based company has yet to go public, its valuation figures are largely estimates based on investors buying shares through private deals. "ByteDance's valuation is high but not unfounded," said Zheng, citing the company's first-quarter revenue that reportedly surpassed Facebook and Instagram owner Meta's top line, and its billions of dollars of investment in artificial intelligence and robust performance of TikTok globally. "These have driven heightened investor interest and consequently its valuation [has risen], despite the geopolitical risks with ByteDance under Chinese ownership," said Zheng, adding that the company may not need to tap public markets in the near future given its ability to raise sufficient private capital. In addition to operating Douyin, the Chinese version of TikTok, ByteDance has also developed artificial intelligence chatbot Doubao and text-to-video AI tools . Publicly available figures indicate that even at a $400 billion valuation, ByteDance appears cheap. In 2024, ByteDance raked in $155 billion in annual revenue, a 52% jump from the previous year, according to data from PitchBook. In comparison, Meta, which recorded a full-year revenue of $164.5 billion last year, has a market value of over $1.9 trillion. Wayne Shiong, co-founder and venture partner at China Growth Capital, said that ByteDance is still "largely undervalued" when compared against the U.S. tech giants such as Meta, whose social media app Facebook has lost U.S. market share to TikTok. The U.S. market contributed about 23% to ByteDance's total revenue, Shiong estimates, noting that a potential divestment of TikTok in the U.S. will have limited impact on the company's business. ByteDance has been developing a new version of TikTok for American users that is expected to operate on a separate algorithm and data system from its global app, The Information reported in July , with the new app expected to be launched on U.S. app stores this month. The U.S.-China framework agreement for TikTok will include new and existing investors in the app's parent ByteDance, sources told CNBC's David Faber. The deal is expected to close in the next 30 to 45 days, according to the sources, who asked not to be named because the details of the negotiations are confidential. As part of the agreement, Oracle will keep its cloud deal with the platform, the people said. "The deal is not done yet so the expectation might be over priced-in," cautioned Alex Ma, a veteran family office investor with exposure to ByteDance, adding that there might be hurdles in execution. "We should not discount the risk of future changes in policies and geopolitical uncertainties as the chip is and will always be on the table," Ma noted. That said, ByteDance's quarterly performance, particularly in markets outside the U.S., was so strong that "the valuation has a basis to go up," he said. Tech optimism builds Rising investor interest in ByteDance reflects broader optimism in Chinese tech companies. The tech darling has garnered traction among investors this year amid a renewed rally in Chinese stocks on the back of AI startup DeepSeek's rapid rise and Beijing's pledge to support the private sector. Zhang Yiming, ByteDance's founder, was among the entrepreneurs invited to a high-level symposium chaired by President Xi Jinping in February. KraneShares CSI China Internet ETF (KWEB) is up more than 60% so far this year. In another sign of renewed interests in Chinese equities, Morgan Stanley said over 90% of the investors surveyed have expressed "explicit willingness to increase their exposure to China," the highest level since early 2021, with tech innovation in AI humanoid robotics among the key areas. With Beijing taking a more assertive stance, including showcasing high-tech weapons at a military parade in early September, ByteDance investors have grown more confident in the country's tech capabilities, LU said. Global investors such as BlackRock, General Atlantic and Susquehanna International Group, own roughly 60% of ByteDance, with its founders owning 20% and employees remaining 20%, according to the company's website .