ByteDance, Caught In Middle Of US-China Tensions, Puts IPO Plans On Ice: Report

A possible IPO for TikTok's Chinese parent company ByteDance appears to still be a long way off.

What Happened: According to the South China Morning Post (SCMP), ByteDance Ltd.’s plans for an initial public offering have been put on hold. Citing unidentified sources, the Hong Kong-based newspaper reported that ByteDance is struggling to comply with China and U.S. regulatory demands. 

ByteDance faces difficulties finding a business structure that can please both China and the U.S., the SCMP report said. 

One complication is how to separate Douyin and TikTok. Douyin is the Chinese counterpart to TikTok, and the two apps share the same algorithm.

The newspaper quoted an unnamed government official involved in regulating ByteDance, saying that the IPO had to be postponed because of tensions between the U.S. and China.

ByteDance reached a $400 billion valuation in the private market, almost tripling its $140 billion valuation from a March 2020 fundraising. 

Why It Matters: ByteDance on Friday said it currently has no plans to seek an IPO. 

In March, ByteDance named a new chief financial officer, former Xiaomi Corp XIACF XIACY executive Shou Zi Chew, who oversaw Xiaomi’s IPO more than two years ago. This raised speculation that a public offering was getting closer for the Bytedance. 

Earlier, Reuters had reported that ByteDance was exploring possibilities to list Douyin in New York or Hong Kong. The company is also trying to obtain a public listing for some of its Chinese businesses including Douyin and Toutiao.

It has also been looking at a potential IPO for its non-China business, which includes TikTok. 

TikTok, with 689 million daily users worldwide, contributed $1 billion to ByteDance’s total revenue of $37 billion in 2020. 

TikTok has been a source of tension between China and the U.S. as federal authorities have raised concerns that Chinese intelligence agencies could obtain the personal data of U.S. citizens through TikTok. 

The company continues to face uncertainty under President Joe Biden, who has largely continued the hardline stance on China begun former President Donald Trump.