TikTok parent company sees significant valuation decline from 2022

ByteDance's — the parent company of the social media app TikTok —valuation has reportedly dropped over 25% year-over-year. After seeing exponential growth over the past three years, ByteDance's revenue has slowed, due in part to increased competition from Meta’s (META) Instagram Reels and YouTube Shorts (GOOG, GOOGL).

Yahoo Finance Tech Editor Dan Howley reports on ByteDance's valuation slump and ongoing discussions surrounding TikTok's regulation in the U.S.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video transcript

[AUDIO LOGO]

RACHELLE AKUFFO: We're getting a rare look into financial numbers from TikTok parent company ByteDance with a new report from the information showing the company's valuation has fallen 26% in the last year to $223.5 billion. Yahoo Finance tech editor Dan Howley joins us now with the details. Hey, Dan.

DAN HOWLEY: That's right, Rachelle. This is coming from various reports from the information in the Wall Street Journal saying that, yeah, the valuation for TikTok has seemingly plummeted 26%-- originally at $300 billion now valued at $22.35 billion. This is based on stock buybacks the company is doing from employees. But they are still seeing revenue rising, although it's starting to slow down. It was up 38% to $85.2 billion in 2022. The year before that though, it rose 80%.

So this is showing more or less a mature company, similar to what we saw with Meta, then Facebook, as it continued to expand. TikTok is a global brand with billions of users, and so now we're starting to see the revenue kind of begin to hit that kind of not necessarily apex, but the line isn't going to be as steep as it was before.

Part of the problem here is that it's also getting increased competition from the likes of Meta with its own Reels feature that's in Instagram as well as YouTube and its YouTube Shorts. Those are basically products that were meant to combat TikTok. And then on top of that, there's the fear of regulation in the US around TikTok and whether or not it will be banned. Montana has a state law that they're trying to get moving forward that would ban the use of the app within the state.

So there's a number of risk factors here for TikTok, although, again, it is highly popular, especially with younger users compared to something like Facebook, for instance. So it doesn't appear as though they're going to be in any real trouble as far as that. But there is stiffer competition than there was before.