April 2025
Article
4 minutes
Top 10 Private Companies Progress Report: Bytedance
Claire Shaw – Portfolio Director
ByteDance is a Chinese technology company, best known for its global short-form video platform TikTok and its Chinese counterpart Douyin.
Douyin and TikTok differ not only geographically but also in content focus and features. Douyin – exclusive to China – emphasises educational content and ecommerce, while TikTok is global, focusing on entertainment and user interaction. Douyin’s interface and live streaming are more commerceoriented compared to TikTok’s broader creative content.
The company is renowned for its AI-driven content recommendation systems, which personalise user experiences across its platforms.
Key Facts
Operational Highlights
- Latest reports suggests that Bytedance has 4bn MAUs (monthly active users) – equivalent to Meta’s user base across the ‘Family of 4’ Apps.
- 2024 was a defining year for TikTok Shop, TikTok’s global ecommerce unit. Estimates by competitors suggest TikTok Shop’s global sales volume more than doubled in 2024, reaching approximately $33bn (135% increase from 2023).
- The situation regarding the TikTok ban in the U.S. is complex and evolving. In April 2025, we are expecting to reach a critical juncture. We do not have any insight into what might happen but the four most likely outcomes are either 1. a ban enforcement 2. an extension or reprieve if negotiations are ongoing 3. potential sale of TikTok 4. ongoing ownership of Tiktok US by Bytedance.
Financial Highlights
- Our investment case for Bytedance rests on the domestic Chinese opportunity with some optionality around the international monetisation of TikTok. (For reference, public sources claim that revenues from US TikTok is approx. 5% of revenue).
- In November 2024, it was reported that a buyback programme conducted by the company valued it at $300bn. Bytedance have been conducting buybacks since 2022 and is a way to provide them with liquidity. Scottish Mortgage has not participated in any of them to date.
- Bytedance continues to trade on significantly lower multiple vs its main peer Meta implying a material “China discount” embedded within the valuation. Both companies have a similar revenue base, are comfortably profitable but while Meta is currently valued at $1.5tn, Bytedance is valued five times lower at c$300bn. A simple EV/sales calculation would therefore validate the China discount effect.
EV: Equity Values: the value of a company available to its shareholders. Shown throughout as at 31 December 2024. Logos courtesy of relevant companies. US Dollar.
Risk Factors
Unlisted investments such as private companies, in which the Trust has a significant investment, can increase risk. These assets may be more difficult to sell, so changes in their prices may be greater.
The trust invests in overseas securities. Changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up.
The Trust invests in emerging markets, which includes China, where difficulties with market volatility, political and economic instability including the risk of market shutdown, trading, liquidity, settlement, corporate governance, regulation, legislation and taxation could arise, resulting in a negative impact on the value of your investment.
About the author - Claire Shaw
Portfolio Director
Claire Shaw is a portfolio director and plays a prominent role in servicing Scottish Mortgage’s UK shareholder base. Before joining in 2019, she spent over a decade as a fund manager with a focus on managing European equity portfolios for a global client base. With a background in analysing companies and communicating investment ideas, Claire is also responsible for creating engaging content that makes the Scottish Mortgage portfolio accessible to all its shareholders. Beyond that, she works closely with the managers, meeting with portfolio companies and conducting in-depth portfolio discussions with shareholders.
Important information
This communication was produced and approved at the time stated and may not have been updated subsequently. It represents views held at the time of production and may not reflect current thinking.
This content does not constitute, and is not subject to the protections afforded to, independent research. Baillie Gifford and its staff may have dealt in the investments concerned. The views expressed are not statements of fact and should not be considered as advice or a recommendation to buy, sell or hold a particular investment.
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