The last glory of Web 2.0, is Douyin really going to go public this time?

(Image source: CFP)

Economic Observer Network reporter Ren Xiaoning Although ByteDance's official response to the listing news is "no comment", there are more and more rumors about Douyin's independent listing.

On May 9, ByteDance concept stock Tianlong Group (300063. SZ), Provincial Broadcasting Group (002400. SZ), Caesar Culture (002425. SZ) and other 10 shares up and down, and Tianyin Holdings (000829. SZ) and others rose sharply. On May 10, The Provincial Broadcasting Group and Tianlong Group continued to rise.

The rise in the stock price of rumors and concept stocks is mainly due to some actions of ByteDance in the past two weeks or so. On April 25, ByteDance appointed a new CFO, Gao Zhun, who previously participated in the IPOs of a number of Chinese technology companies, including Meituan, JD.com, Pinduoduo, and Xiaomi. On May 6, ByteDance (Hong Kong) Limited changed its name to Douyin Group (Hong Kong) Limited. In addition, recently, many companies under ByteDance have also successively changed their names to "Douyin".

"ByteDance is definitely preparing for listing by doing these actions." Zhang Yi, CEO of Ai Media Consulting, told the Economic Observer Network that now is not the best time for Internet companies to go public, but for ByteDance, which has been established for more than 10 years, the investment institutions behind it have exit needs. A former Internet industry investor with 10 years of experience in investment content and social track told reporters that from the perspective of recent actions, ByteDance is definitely making efforts for listing. However, whether it can be successfully listed is still uncontrollable and has high uncertainty.

WEB2.0 The final glory

The above-mentioned former Internet industry investors described ByteDance to reporters as "the last glory of the WEB2.0 era". ByteDance is a company that has risen in the domestic mobile Internet era, and other small Internet giants in the same period have basically been listed in the United States or Hong Kong.

Meituan and Didi, which are also known as "TMD" with ByteDance, are listed in Hong Kong and the United States respectively. Pinduoduo, which was founded later than ByteDance, was listed in the United States in 2018. Kuaishou, which is also a short video competitor with ByteDance, will be listed in Hong Kong in 2021. These companies, after the listing of the high peak market value are more than 100 billion US dollars. According to the "Global Unicorn Index 2021" released by The Hurun Research Institute at the end of 2021, ByteDance has grown to a valuation of 2.3 trillion yuan and surpassed Ant Group's world's largest unicorn.

ByteDance's listing rumors have been circulating for a long time, but they have never come true. As early as 2018 and 2019, ByteDance had news of listing on the Hong Kong, New York and even the Science and Technology Innovation Board, when ByteDance denied it. In 2020, there are rumors that ByteDance is considering promoting the douyin business to be listed in Hong Kong alone, and the relevant person in charge of ByteDance responded to the Economic Observer Network at that time that it was considering the listing plan of some businesses, but it had not yet been finalized. In the first half of 2021, ByteDance was again revealed to be in full swing to prepare for the listing, and in late March of the same year, ByteDance hired Former Xiaomi executive Zhou Shoufu as the newly established chief financial officer, which was seen as ByteDance preparing for the IPO. However, on April 23, 2021, ByteDance issued a statement saying that after careful study, it believes that the company does not have the listing conditions for the time being and has no listing plan at present.

Until recently, ByteDance once again had a suspected pre-listing action. ByteDance responded to this Economic Observer Network: No comment.

The above-mentioned former Internet industry investors told reporters that in the past few years, ByteDance's active willingness to list was not large, "It is not short of money, and the company's liquidity in the primary market is not worse than that in the secondary market." "Before 2020, it is the stage of rapid development of ByteDance's vibrato, and in this stage, there is no need to go public." What are the benefits of going public? Can you get the money? But it can also raise money at any time in the primary market. ”

After 2020, ByteDance has gradually made a move to go public, but the market environment has changed. After the outbreak of the Luckin counterfeiting incident in April 2020, Chinese stocks encountered a crisis of trust in the US stock market. The Foreign Companies Accountability Act, signed by the U.S. government in December 2020, requires foreign companies listed in the U.S. to be subject to inspection of their audit working papers by the U.S. Public Company Accounting Oversight Board (PCAOB).

Even if the listing is successful this time, the above-mentioned former Internet industry investors believe that from the perspective of the business itself, it does not mean much to ByteDance. The greater significance is that there is an account for the employees who hold the options, and there is an account for the investors who hold the shares. In fact, this company has passed a period of high growth and high outbreak, and after listing, it can dispose of many early signed investment terms and repurchase priority liquidation matters, which is also a milestone for the company.

But whether it can be successfully listed is still unknown, he sighed to reporters: "After so many years of watching so many companies, I feel that the listing is a matter of fate, and no one can say for sure." ”

Can it be achieved this time?

On May 6, ByteDance (Hong Kong) Co., Ltd. changed its name to Douyin Group (Hong Kong) Co., Ltd., and several companies changed their names to Douyin in the same period. Zhang Yi feels that after this wave of actions, there is a great possibility that ByteDance can be listed in Hong Kong. "Douyin mainly plays short videos, and Kuaishou has previously used short video identity to list in Hong Kong, and has become."

According to normal logic, if it can be listed as the main body of ByteDance, and then split the subdivision business to be listed separately, the benefit to the company is the greatest. For example, Tencent, first Tencent Group listed, and later there were Tencent Music, Reading Group and other subsidiaries listed. Now ByteDance has changed its name to Douyin, and listing with Douyin as the main body will lose some overall interests, and it can also be seen that its determination to go public.

As early as 2019, Zhang Yi felt that it was the best node for ByteDance to go public, when Douyin was just like the day, commercialization had just begun, and new business was full of imagination. In addition to 2019, another good listing node is this year.

This year, the market has two factors that are good for ByteDance's listing. First, the monetization ability of ByteDance's overseas business, TikTok, is growing rapidly. The "Cross-border Live E-commerce Trends" released by Ai Media Consulting in March predicts that the market size of cross-border live e-commerce led by TikTok will more than double that of last year in 2022. ByteDance is the parent company of TikTok, even if the Hong Kong listing does not involve the TikTok part, it will not be like Kuaishou after the listing of the stock price trend is getting lower and lower, "ByteDance still has a growth engine, which is relatively rare." ”

The second is the rise of Douyin e-commerce. Although the Douyin advertising business has been impacted, Douyin e-commerce has become the "most beautiful cub in the e-commerce industry" after Pinduoduo, and is currently growing.

It is also worth noting that ByteDance also has competitive pressure to go public. As the largest short video platform in China, Douyin is being chased by video numbers. The "2021 Video Number Development White Paper" released by the Optics Research Institute mentioned that the video number DAU in 2021 has exceeded 500 million, an increase of 79% over 2020. In 2022, the video number DAU is expected to reach 600 million. The daily active users of Douyin have always hovered at more than 600 million, which means that video users may catch up with Douyin this year.

Entering 2022, the video number continues to exert force, and since this year, there have been many activities such as Zhang Guorong concert and Cui Jian concert, and the video number live broadcast and video number information flow that appear in the circle of friends have also increased rapidly. In the first quarter of this year, Tencent mentioned in its financial report that next, the video number will highlight commercialization, including short video streaming advertising, live broadcast tipping and live e-commerce.

"The current progress of the video number is very fierce, developing users in the first half of the year and commercialization in the second half of the year. Tencent has not been able to figure out the relationship between social networking and short videos before, and once it is clear, Douyin will be dangerous. Zhang Yi told reporters that in the past 3 years, Douyin has not done social networking. In the current stage of the rise of the video number, if ByteDance does not go public, the investors behind it will also urge.

In the 10 years since its establishment, ByteDance has attracted investment from many investment institutions, completed more than 9 rounds of financing, with a cumulative amount of more than 7 billion US dollars, including Sequoia Capital, Haina Asia, Source Code Capital, Tiger Global Fund, KKR, SoftBank, DST and many other institutions. Due to the delay in listing, some shareholders began to try to cash out. In 2021, Haina Asia, one of ByteDance's investors, sought to sell a small stake in it. At that time, ByteDance's valuation fell, from a valuation of $500 billion in July 2021 to $360 billion in October.

In November last year, ByteDance adjusted its architecture and merged its profitable, mature today's headlines, watermelon videos, headline search, encyclopedia and domestic vertical service businesses into Douyin. In 2020, ByteDance's total revenue was 236.6 billion yuan, and the advertising business revenue was 183.1 billion yuan, accounting for 77.4%, of which Douyin contributed nearly 60% of the total advertising revenue, and Toutiao contributed 20%. In the second half of last year, ByteDance also launched several rounds of layoffs, laying off some education, games and local commercialization teams, no longer emphasizing unlimited investment, but began to "slim down" and compress the business.

Futu investment research team told reporters that relative to the overall listing, the group company split each business module listing, if the business module assets are excellent, you can raise more funds.

Zhang Yi believes that ByteDance established the Douyin Group, although it is similar to Kuaishou in the field of short video, but it certainly does not want to do only Kuaishou. "Judging from the stock price trend of Kuaishou, there will be a certain shadow against The target Kuaishou. Douyin needs better financial data to prove that it and Kuaishou are not the same thing. ”

Factors influencing listing

In February 2021, Kuaishou was listed in Hong Kong, becoming the "first short video stock" in China. If ByteDance separates Douyin, will it be able to successfully list in Hong Kong?

The above-mentioned former Internet industry investors believe that there is a possibility of success, but there are still many uncontrollable risks. Now ByteDance only has a preliminary action, from the issuance of the prospectus there is still a period of time, after the issuance of the prospectus needs to wait for the hearing, if not smooth, may also need to update the prospectus again, in the process, may face some policy regulatory changes.

"It's too big and there are too many factors to consider. It is not a simple operation for a 1 billion, $2 billion company to go public, even if it is only the domestic business of Douyin, it is a large company that started at $200 billion. How many shares it can put in the Hong Kong stock market and how to communicate with the management department are not simply a simple matter of a company listing. There are too many uncontrollable factors. ”

Recently, the Hong Kong market has been poorly liquid, the valuation of Hong Kong internet companies is at a low value, and the market value of Kuaishou, which will be listed in 2021, has fallen from trillions of Hong Kong dollars at the time of listing to HK$249.8 billion at the close of trading on May 10. Can the current Hong Kong stocks catch the large-scale Internet giant such as Douyin?

Futu investment research team told reporters that Hong Kong stocks need a steady stream of high-quality asset injection, the current total market value of Hong Kong stocks at 35.46 trillion Hong Kong dollars, splitting the douyin listing is a positive stimulus to the market.

Whether ByteDance can be listed, there is also a risk point in TikTok. As a subsidiary of ByteDance, TikTok can compete with YouTube, Facebook, etc. in overseas markets and become a star product for domestic overseas products. But after 2020, TikTok was banned in the Indian market, and there were rumors that Microsoft tried to acquire TikTok's U.S. business, and as a product of a Chinese company, TikTok's fate was ups and downs.

How to deal with the relationship between TikTok and ByteDance is also something that Needs To be seriously considered when ByteDance goes public.