TikTok owner ByteDance offers to buy back shares from staff at $160 apiece
ByteDance Offers Employee Share Buyback Plan
By Brenda Goh and Josh Ye
9:45 AM UTC – November 8, 2023
China’s ByteDance, the parent company of popular short video app TikTok, is making an enticing offer to its employees outside the United States. The company is proposing to buy back shares from its employees for $160 apiece, according to a source familiar with the matter. This plan, which has been confirmed by ByteDance, aims to provide liquidity options for staff through such programs.
The $160 price per share is in line with a previous offer made to current and former U.S. employees. ByteDance is looking to purchase at least $300 million worth of stock at this price. However, this valuation is about 26% lower than the company’s worth a year earlier, which was $223.5 billion. Last year, ByteDance was valued at $300 billion in a buyback program for its non-U.S. employees.
It’s worth noting that the latest $160 price is higher than the $155 price set in an earlier buyback in April. ByteDance has been offering buyback programs twice a year to eligible current and former staff since 2017, allowing employees to cash in shares without waiting for the company to go public.
An initial public offering for ByteDance has been highly anticipated, but the company has stated that it has no immediate plans for an IPO due to increased scrutiny from Beijing on China’s tech giants.
Reporting by Brenda Goh in Shanghai and Josh Ye in Hong KongEditing by Mark Potter
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Why is ByteDance offering a share buyback plan to its employees?
T 30% higher than the valuation of the company in recent private fundraising rounds, indicating confidence in the company’s long-term prospects.
By offering a share buyback plan, ByteDance is seeking to reward its employees and give them access to liquidity. This move is especially significant for employees in countries outside the United States, who may not have had the opportunity to participate in previous stock offerings. It also demonstrates the company’s commitment to retaining top talent and incentivizing employees to stay with the company.
ByteDance has experienced significant growth in recent years, fueled by the success of its flagship app TikTok. The app has become a global sensation, attracting billions of users and emerging as a powerful player in the social media landscape. ByteDance’s success has also attracted the attention of investors, with the company being valued at over $400 billion.
The share buyback plan is a strategic move by ByteDance to enhance employee loyalty and motivation. By giving employees the opportunity to sell their shares at a competitive price, the company is providing a means for them to unlock the value of their holdings. This can be particularly attractive to employees who have been with the company since its early stages and have seen the value of their shares appreciate significantly.
Furthermore, the share buyback plan can also effectively address any concerns regarding the lack of a public market for ByteDance shares. By offering an internal buyback program, employees have a legitimate avenue to sell their shares and realize gains, without having to wait for an initial public offering (IPO) or other liquidity events.
However, it’s important to note that the share buyback plan is not without risks. The $160 per share price may not accurately reflect the true value of the company, and employees should carefully consider their options before deciding to sell. Additionally, there may be tax implications associated with selling shares, and employees should seek professional advice to fully understand the financial implications.
In conclusion, ByteDance’s offer to buy back shares from its employees is a significant move that demonstrates the company’s commitment to its workforce. By giving employees the opportunity to sell their shares at a competitive price, ByteDance is providing a means for them to unlock the value of their holdings and address any concerns regarding the lack of liquidity in the market. This move not only rewards employees but also enhances their loyalty and motivation, ensuring that ByteDance continues to attract and retain top talent as it continues its remarkable growth trajectory.
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