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Tuesday, February 7, 2023

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Big setback! TikTok ad sales target slashed by $2 billion after technical downturn

TikTok has cut about $2 billion of its target for 2022 ad revenue, highlighting the fallout from a global downturn.

TikTok from ByteDance Ltd. has cut about $2 billion from its target for 2022 ad revenue, highlighting the fallout from a global downturn that plunged fellow internet giants from Google to Meta Platforms Inc.

TikTok Chief Executive Officer Shou Zi Chew told a handful of employees at a recent meeting that the Chinese-owned app has cut its ad forecast for 2022 from at least $12 billion earlier, according to a person briefed on the matter. The review did not include smaller business segments such as e-commerce, the person added, who asked not to be identified when discussing private information.

The slimmed-down ambition reflects a slump in global marketing spend as businesses and consumers tighten their budgets and prepare for a potential recession. Many of the world’s largest companies, including Alphabet Inc., Amazon. com Inc., Meta and Microsoft Corp. have reported results that have largely fallen short of forecasts, taking hundreds of millions to billions of dollars off their market valuations.

ByteDance has become the world’s most valuable startup thanks to the success of apps like TikTok and its Chinese counterpart Douyin, but it is caught between Beijing’s crackdown on home internet companies and Washington’s suspicions about the services. Concerns about how TikTok stores US user data and manages information flows between employees in China and elsewhere have resurfaced among US lawmakers and politicians as they prepare for the midterm elections.

Like most social media platforms, TikTok gets most of its revenue from advertising.

Parent company ByteDance has postponed plans for an IPO as investors flee riskier assets. In September, it offered to buy back as much as $3 billion in its own stock at a valuation of about $300 billion, giving existing lenders a way to make money. Douyin makes much more income, but it’s unclear how the Chinese downturn affects that unit.

TikTok representatives did not immediately respond to a request for comment on the revenue target, which was first reported by the Financial Times.

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