TikTok Below Hearth Reveals $13 Billion Drop in Founder’s Fortune

TikTok Under Fire Reveals $13 Billion Drop in Founder's Fortune

Zhang Yiming, the 39-year-old co-founder of ByteDance Ltd., TikTok’s Chinese language father or mother.

TikTok CEO Shou Chew’s testimony earlier than Congress final week has completed little to assuage US safety considerations surrounding the social-media firm.

But it has shed new mild on the fortune of one of many world’s richest individuals: Zhang Yiming, the 39-year-old co-founder of ByteDance Ltd., TikTok’s Chinese language father or mother.

ByteDance’s founders personal about 20% of the corporate, Chew stated in his testimony – a determine decrease than reported estimates lately. That might put Zhang’s wealth at $42.3 billion, based mostly on the agency’s $220 billion worth from personal trades revealed earlier this month, in keeping with the Bloomberg Billionaires Index. 

That estimate is down about $13 billion from September, when the world’s largest startup initiated a inventory buyback that valued it at about $300 billion. Two years in the past, Zhang may have been value greater than $60 billion – making him considered one of Asia’s richest individuals – with traders keen to purchase a bit at a valuation of virtually $400 billion.

Beijing-based ByteDance has needed to take care of points past simply greater rates of interest and inflation, which have taken a toll on expertise firms.

Its TikTok platform, the place youngsters publish dance and singing movies and small companies promote their merchandise, has amassed greater than 150 million US customers, resulting in considerations about China’s entry to the information it gathers and the specter of a ban if it does not spin off from its father or mother.

Hostile Listening to

Chew final week sat by a hostile four-and-a-half hour congressional listening to during which he sought to guard the corporate.

“TikTok is caught on this geopolitical tug of battle between the US and China because the clock ticks in the direction of a US ban and compelled sale,” stated Dan Ives, an analyst at Wedbush Securities in New York. “The concern is: US shoppers begin to develop weary of the China information subject, which has impacted the perceived worth of TikTok. That is all a recreation of high-stakes poker.”

Bloomberg’s wealth index amended Zhang’s internet value estimate to replicate the acknowledged possession and drop in ByteDance’s valuation.


Shou Chew, throughout a Home Power and Commerce Committee listening to in Washington DC on Thursday, March 23, 2023.

Many of the founders’ 20% stake belongs to Zhang, whereas co-founder Liang Rubo has about 1%, in keeping with an individual conversant in the matter. That may give Liang a $2.1 billion internet value.

Institutional traders maintain 60% of ByteDance and workers personal the remaining 20%, in keeping with Chew’s testimony. 

Representatives for ByteDance did not reply to a request for remark for this story.

Extra Energy

Whereas Zhang not manages ByteDance’s each day operations, the founders’ shares have weighted voting rights, a typical follow within the business, Chew stated. That seemingly provides them extra energy to push by selections. 

Zhang stepped down as ByteDance CEO in Could 2021 and stop its board the identical 12 months, leaving each positions to Liang, 40, his faculty roommate.

Based in a four-bedroom residence a few decade in the past, ByteDance’s valuation has since surged at the least 11 instances. TikTok, together with its Chinese language twin app Douyin, is the corporate’s crown jewel and has impressed homegrown upstarts like retailers Shein Group and PDD Holdings Inc.’s Temu to carve out a spot within the US’s nonetheless fast-growing mobile-internet enviornment. 

Their pursuit for brand new progress comes after two years of infinite regulatory crackdowns and Covid restrictions that disrupted consumption and chilled founders and traders at residence. Like a lot of its rivals, ByteDance was pressured to curtail a few of its riskier enlargement tasks – together with in gaming and enterprise funding – beneath Beijing’s intensified scrutiny.

However the mounting US considerations over China’s affect have taken a toll on ByteDance. 

Whereas Chew harassed that TikTok has dedicated $1.5 billion to strengthening controls over its consumer information safety, the agency’s management is contemplating separating from its Chinese language father or mother, although that may be the final resort, individuals conversant in the matter have stated. Bloomberg Intelligence estimates the US enterprise could possibly be value $40 billion to $50 billion alone. 

Any TikTok sale or spinoff would quantity to a expertise export and require administrative approvals from China, a spokeswoman for the nation’s Ministry of Commerce advised reporters earlier than final week’s testimony. 

ByteDance itself is unlikely to surrender its US arm simply provided that its algorithm is the premise for its profitable enterprise and TikTok in all probability has a shared code base with the group’s different apps, in keeping with BI analysts Mandeep Singh and Damian Reimertz. 

Which means ByteDance – and Zhang – might have extra powerful instances forward. 

“Amid elevated scrutiny round information seize, even inside its personal app, TikTok might stay at a product drawback versus its rival social-media platforms within the US,” Singh and Reimertz wrote in a word Wednesday.

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