Tech giant ByteDance is now reportedly looking to list the Chinese version of its short video app Douyin in the U.S.
A New York IPO venue has been in consideration since President Joe Biden took office in January but is still in preliminary discussions, the South China Morning Post reported, citing a source familiar with the situation.
The news outlet also notes that ByteDance could follow up with a secondary listing in Hong Kong, meaning a New York share sale isn’t “mutually exclusive.”
“The general response [from ByteDance investors] is, ‘Why not?’,” the source said. “Hong Kong will be crazy about Douyin, everyone can see that after the Kuaishou listing … but Douyin will be hot in the US market as well. Just look at the price surges of China tech stocks there,” The source said.
A U.S. IPO would represent a u-turn from when Reuters reported in October that ByteDance held early-stage talks to list Douyin on the Stock Exchange of Hong Kong. Fellow Chinese short video app Kuaishou Technology (HKEX: 01024) wound up choosing Hong Kong as its IPO destination, raising HK$42 billion ($5.4 billion).
Nevertheless, American investors should be intrigued by the popular short video app’s success if it pursues a New York IPO, even as Sino-U.S. trade relations haven’t been on the best terms in the past 12 months. As of August, Douyin reported it had 600 million daily active users.
But much of those trade tensions have been sparked by Biden’s predecessor Donald Trump, who began to blame China when the coronavirus pandemic started to spread and in the U.S. and wreak havoc on the economy.
Separately, the Trump administration took an aggressive approach to ByteDance's U.S. version of its short video app TikTok. In the summer, Trump signed an executive order banning TikTok if it wasn't sold by its Chinese parent ByteDance. However, Trump's ban on TikTok was blocked by separate federal court rulings.
Now, Biden wants to conduct due diligence on the matter and has put the forced sale of TikTok on hold. A U.S. IPO of Douyin could help change “the tone” of Sino-U.S. trade relations and even reverse the ban on TikTok, according to the SCMP.
According to a report from Reuters in July, ByteDance brought in around $2.9 billion in profit in 2019. In 2020, the company has aimed to generate $28.62 billion in revenues with TikTok expected to account for $1 billion of the total.
China accounts for the majority of ByteDance’s revenues of roughly $16 billion in 2019, which were mainly derived from apps such as Douyin, Jinri Toutiao, Xigua, and Pipixia.