This has also sparked speculation that ByteDance is preparing for a listing plan. The Paper reporter learned from people familiar with the matter that Byte may split the Douyin section for listing, including Douyin, Toutiao, Watermelon Video, Search, and Encyclopedia. Many important products of Byte.
Previously, on November 2, 2021, ByteDance CEO Liang Rubo issued an email to all staff announcing organizational adjustments, implementing BU (Business Unit, business unit) business lines, and establishing six business sectors: Douyin, Vigorouseducate, Feishu, Volcano Engine, Lightyear and TikTok. The heads of relevant business segments report to Liang Rubo.
“The reason for merging Douyin and Toutiao, watermelon, search and other products into the same business line is because their businesses overlap, including video, graphics, information, etc., and the merger is more conducive to the integrity of the industrial ecology after listing.” One person Douyin insiders told The Paper.
The logic of Toutiao’s merger into Douyin Group
The Paper reporter learned that ByteDance does have plans to go public in Hong Kong this time. A major concern of the outside world is: Why did ByteDance split the Douyin sector for listing?
“ByteDance let Douyin take the lead to lead the domestic business listing, of course, out of global strategic considerations; more importantly, it may also be related to Douyin’s more imaginative business.” Ma Tianyi, chief analyst of Minsheng Securities Communications Tell The Paper reporters.
Ma Tianyi believes that although Douyin’s advertising revenue has slowed down, it is still one of the top traffic platforms in China. “For the Internet industry, the most important capital is traffic and user attention. Douyin, which has great advantages in both aspects, is undoubtedly the key for ByteDance to attract investors in the capital market.”
Another major concern is: Why are the important products of Bytes such as Toutiao and Xigua Video incorporated into the Douyin section? It is worth noting that when Liang Rubo announced the organizational adjustment last year, he had already merged Toutiao, Xigua Video, Search, Encyclopedia and domestic vertical service businesses into Douyin. The internal letter stated that this sector will be responsible for the overall domestic information and service business. develop.
The relevant person in charge of Douyin told The Paper that Douyin, Toutiao, Watermelon, Search, and Encyclopedia are all information service businesses. One of the adjustment principles at that time was “merge closely coordinated businesses and teams into business segments”, in order to cope with the challenges of business complexity and team size.
Another insider admitted to reporters that since Douyin’s daily activity and profitability have surpassed Toutiao, Douyin must have a greater voice and resource inclination internally.
Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center of Zhejiang University International Business School, told The Paper: “In Byte, Douyin is indeed the most important product. Through restructuring, Douyin’s brand identity can be more prominent. , the future listing, while the short video content business of Douyin is strengthened, other businesses will gradually be listed in batches through Douyin channels in the future, and will be incorporated into Douyin Group to achieve integrated development.”
He believes that if Toutiao, Watermelon and other Toutiao products and Douyin are listed separately, it is easy to compete with each other and compete with each other in the same industry. Therefore, it is more convenient for these businesses to be listed in Douyin Group as a whole.ideal.
“For example, Toutiao has video content, and Douyin is a short video. They both have the attributes of video content, so there is overlap in business. Liang Rubo put products into Douyin. The Sound Group as a whole will operate the relevant platforms in a unified manner to solve the problem of crossover between various internal businesses.” Pan Helin said.
New CFO high access bureau: has led over 100 Chinese companies to go public overseas
It is worth noting that another important move that Byte revealed to be listed in Hong Kong this time is the appointment of the new CFO Micro Motion.
Before serving as CFO of ByteDance, Micro Motion was a senior partner at Skadden International LLP and a member of the Policy Committee of its global governing body. According to the data, Micro Motion has provided legal services for a number of companies in the listing and other capital market financing projects, including Meituan,JD.com,Pinduoduo,MilletWait. She also advises on numerous M&A and private equity projects, includingBaidu, Byte Beat, etc.
In 2003, Micro Motion participatedCtripIPO, providing listing legal counsel services for it. This is the first Chinese company IPO project she participated in. Public information shows that since then, she has led the team to participate in the overseas listing of 123 Chinese companies. So far, nearly half of the top 50 Chinese Internet and technology listed companies listed on the US and Hong Kong stocks have been listed by her agent, covering almost the past ten years of Chinese Internet companies. All major companies in the industry.
Micro Motion’s rich IPO resume will undoubtedly provide important help for ByteDance’s listing.
Micro Motion
It is worth noting that when ByteDance is preparing to go public this time, its founder Zhang Yiming is not on the list of directors of the company. The reporter inquired about the Hong Kong company online search center and found that there are three directors of Douyin Group (Hong Kong) Co., Ltd., namely ByteDance CEO Liang Rubo, Mo Zhaoqi and Zhang Peng.
According to the information of the Hong Kong Search Center, Liang Rubo’s appointment date is July 23, 2021, and he is registered with a Chinese passport. Mo Zhaoqi’s appointment date is May 6, 2022, and he was registered with a Chinese Hong Kong passport. The Paper reporter learned that he is an employee of ByteDance’s legal team.
Zhang Peng’s appointment date is May 6, 2022. He is registered with a Hong Kong passport, and is suspected to be a person in the financial field. According to the Tianyancha APP, Zhang Peng is a shareholder of Tianjin ByteDance Private Equity Fund Management Co., Ltd. with a shareholding ratio of 20% and serves as its supervisor.
From the perspective of revenue, ByteDance’s revenue still maintains growth, but the growth rate has slowed down. People familiar with the matter have previously revealed that ByteDance’s annual revenue in 2021 is about 58 billion US dollars, or about 367.8 billion yuan, a year-on-year increase of 70%, and the growth rate has slowed down compared with 2020.
The most severe slowdown was in the advertising business. In November last year, a person familiar with the matter said that ByteDance had mentioned in an internal meeting that, except for Douyin e-commerce, the advertising revenue of domestic businesses had stopped growing in the past six months.
While revenue has slowed, losses have persisted. Internal documents show that in 2020, ByteDance’s actual revenue was 236.6 billion yuan, a year-on-year increase of 111%, and its operating loss reached 14.7 billion yuan.
According to CVSource’s investment data, ByteDance has completed 10 rounds of financing since its establishment in 2012, with a cumulative amount of over US$7 billion. According to the “2021 Global Unicorn List” released by Hurun, ByteDance has become the world’s largest unicorn with a valuation of 2.25 trillion yuan. “The valuation of Douyin’s listing is estimated to be higher than that of Kuaishou, which is difficult to calculate, but it may not meet the expectations of the original investors.” Pan Helin said.
Pan Helin believes that the current valuation of Internet stocks in Hong Kong stocks is relatively low. For example, the market value of Kuaishou has dropped from trillions at the time of listing to HK$250 billion, and it is still near the lowest valuation level. At this time, Douyin is listed and passed the valuation. The premium you get for value benchmarking may not be ideal.
Ma Tianyi also expressed a similar view. “As the mobile internet dividend shrinks, it is difficult for Douyin’s traffic to grow without limit.”
“For ByteDance at this stage, whether to go public or not is like a balance with abyss on both sides. On the one hand, there is the pressure of slowing revenue and shareholders’ dissatisfaction; on the other hand, it is the reality that the valuation after listing may not be ideal. An example.” Ma Tianyi said.
