According to media reports, after resolving the long-standing regulatory issues surrounding TikTok's U.S. operations, the valuation logic of ByteDance is being re-evaluated by the market.
On January 15, the well-known technology media outlet The Information published an in-depth analysis article written by Anita Ramaswamy and Jing Yang, which pointed out that among the highly valued but still privatized technology companies, SpaceX and China's ByteDance are undoubtedly the two largest. SpaceX has signaled its intention to go public this year, and with ByteDance reaching an agreement with the U.S. to resolve TikTok's survival crisis, the path for this Chinese tech giant to go public in the coming years seems to be paved.
The article presents a thought-provoking viewpoint: The market's current pricing of ByteDance appears to be overly conservative. According to Caplight data, ByteDance's valuation in the private secondary market is currently about $330 billion, although investors had previously given a valuation equivalent to $480 billion last November, it still seems &#34;cheap&#34; compared to Meta (the parent company of Facebook). It is worth noting that Meta's enterprise value is as high as $1.6 trillion, while both companies have similar social media businesses, with annual revenues approaching the $200 billion mark.
The article argues that ByteDance's stock price also appears to be severely undervalued. Particularly considering that ByteDance has already established a leading position in the AI field in China, this &#34;undervaluation&#34; seems particularly striking. As the article states, in addition to its advertising business, its AI technology is driving the expansion of its cloud business and even starting to capture customers from larger competitor Alibaba.
<h2>Valuation Inversion: The Overlooked Growth Multiple</h2>
To understand why ByteDance is considered &#34;cheap,&#34; one must look at the specific financial data. Although there is a lack of the latest public financial statements, Reuters reported that in the second quarter of 2025, ByteDance's revenue grew by 25% to $48 billion, a growth rate that exceeded Meta's 22% during the same period. If this trend continues throughout the year, ByteDance's total revenue for 2025 will approach $200 billion.
Here arises an interesting mathematical question: if we assume ByteDance maintains the same growth rate as Meta in 2026, then based on the current valuation, ByteDance's price-to-sales ratio (the ratio of stock price to sales) would be less than 2 times the expected sales for 2026.
In contrast, Meta's trading price is 7 times next year's expected sales. Even for Pinterest, a slower-growing social media and advertising company, its valuation multiple is close to 4 times. Looking at another comparable entity—Tencent, which also relies on digital advertising for revenue. John Choi, a stock analyst at Daiwa Capital Markets in Hong Kong, pointed out that Tencent's trading price is 6.4 times next year's estimated sales
Choi candidly stated in the article:
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I believe that ByteDance's gains from AI investments should surpass those of its peers, including Tencent.
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This indicates that the market may not have fully priced in ByteDance's potential in the AI field.
<h2>Profit and Investment: Two Sides of the Coin</h2>
Of course, the valuation difference between ByteDance and Meta can be partly explained by profit margins. This is also a common concern for investors: how efficient is ByteDance in making money?
The Information reported in April that ByteDance's net profit margin for 2024 is 21%, while Meta's net profit margin for the same year is close to 38%. This gap is objectively present. Moreover, executives from both companies have warned investors that profit margins may decline with large-scale investments in AI.
However, this investment does not seem to hinder the astonishing growth of ByteDance's absolute profits. Bloomberg recently reported that ByteDance's profits are expected to reach $50 billion in 2025, a 51% increase from 2024.
It's like two racing cars, one has slightly higher fuel consumption (cost), but its acceleration performance (profit growth rate) is improving at an astonishing speed. In this case, simply focusing on the current fuel consumption while ignoring its future speed potential is clearly unwise.
<h2>TikTok's Certainty: A Premium from Certainty</h2>
One important reason for ByteDance's discounted valuation in recent years has been the regulatory &#34;black swan&#34; faced by TikTok in the United States. This not only filled the future of this super app with uncertainty but also hindered the company's IPO process.
But the situation has fundamentally reversed. According to CCTV News, ByteDance has signed a deal to sell 80.1% of its U.S. data security business to a consortium of investors including Oracle, Silver Lake, and Abu Dhabi Investment Company MGX, based on an agreement outlined by the Trump administration in September. This transaction brings the company into compliance with a legal requirement for 2024, which mandates that ByteDance must reduce its ownership in TikTok's U.S. division to below 20%, thus eliminating the threat of a U.S. ban that has lasted for five years.
The return of this regulatory certainty is invaluable. One ByteDance investor stated that eliminating regulatory uncertainty will make advertisers more willing to spend on TikTok, and merchants more willing to sell through TikTok Shop. Considering that TikTok has 170 million monthly active users in the U.S., its growth potential remains enormous.
As analyst John Choi noted,
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From the perspective of advertisers outside of China, one of the most important things is stability and visibility, so completing the U.S. deal should greatly benefit ByteDance
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<h2>Is the Sleeping Giant About to Wake Up?</h2>
For investors, the key question now is: how much can ByteDance still earn from TikTok after establishing the joint venture? This is a complex arithmetic problem. TikTok CEO Shou Zi Chew stated that the joint venture will be responsible for data protection and algorithm security, but the advertising and e-commerce businesses will still belong to ByteDance. ByteDance will need to share revenue with the joint venture, and the joint venture will pay ByteDance for algorithm usage, but at the same time, ByteDance also bears the expensive costs of data security.
Although the details of the revenue sharing are still unclear, this does not hinder the core conclusion of the article: Even with these unknowns, ByteDance's relatively low valuation still makes it a highly sought-after target for public offerings.
Overall, the author predicts that with the removal of regulatory obstacles in the U.S., ByteDance's IPO may be on the agenda

BYTED

Analysis indicates that after resolving TikTok's regulatory issues in the United States, ByteDance's valuation has been significantly underestimated. Its annual revenue is nearing USD 200 billion with strong profit growth, especially leading in the AI sector. The current valuation of approximately USD 330 billion does not fully reflect these fundamentals and growth potential, and the time for a valuation reassessment has arrived

$330 billion for ByteDance is too cheap