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TikTok owner ByteDance has been losing momentum in 2024, with slower revenue growth and narrower profit margins for the first three quarters compared with last year, according to local media.
Revenue growth “significantly” slowed for the first nine months of the year, while profit margins slimmed for the first time since 2022, Chinese tech media 36Kr reported on Thursday, citing an unnamed source.
TikTok‘s revenue from January to September “missed expectations”, while the app’s e-commerce feature TikTok Shop “missed its GMV [gross merchandise volume] target for the past few months”, failing to replicate the success of selling goods through Douyin, the version of the app for mainland China.
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ByteDance has been pushing TikTok Shop in several international markets – including the US, UK and Southeast Asian countries – as it looks for monetisation beyond advertising on its hugely popular but unprofitable video platform.
The report attributed the weak performance to sluggish advertising spending in China, the impact of geopolitical tensions and the fact that the company has burned large sums of cash on artificial intelligence and large language models.
TikTok Shop and an online influencer prepare for a live-streaming session of selling goods during the Consumer Electronics Show (CES) at the Aria Resort & Casino in Las Vegas on January 10, 2024. Photo: Matt Haldane alt=TikTok Shop and an online influencer prepare for a live-streaming session of selling goods during the Consumer Electronics Show (CES) at the Aria Resort & Casino in Las Vegas on January 10, 2024. Photo: Matt Haldane>
ByteDance’s advertising revenue growth in China fell below 17 per cent in the third quarter, down from 40 per cent in the first quarter, online media outlet LatePost reported on Monday. The ads department missed its targets for the past two quarters, according to the report.
ByteDance did not immediately respond to a request for comment on Thursday. The privately held Beijing-based company does not publish financial results.
ByteDance’s weak e-commerce business is also a main contributor to slow ad growth, according to LatePost, as merchants and brands on the platform are the main advertisers.
Wei Wenwen, president of Douyin’s e-commerce unit, said last month that Douyin GMV increased 46 per cent between August 2023 and July of this year. This was much slower than the 80 per cent growth the platform saw from May 2022 to April 2023, as well as the threefold jump in 2021 after the launch of its online shopping business a year earlier.
Competition is likely to ramp up in the final quarter, as shopping platforms jockey to offer the best deals for Singles’ Day, the country’s largest shopping festival that culminates on November 11.
Alibaba Group Holding, which runs the Tmall and Taobao marketplaces, JD.com and PDD Holdings’ Pinduoduo all began their shopping event on October 14, much earlier than in previous years, followed by Douyin four days later. Alibaba owns the South China Morning Post.
Overseas, ByteDance has been grappling with mounting pressure over TikTok. The app faces a ban in the US if it is not divested from its Chinese owner by January 19, as required by a law that US President Joe Biden signed in April.
Earlier this month, 13 US states and the District of Columbia sued TikTok for allegedly failing to protect young users.
Meanwhile, efforts to expand overseas e-commerce have faced an uphill battle against fast-growing rivals Shein and Temu, also owned by PDD Holdings. Earlier this month, Temu launched in Vietnam, one of TikTok Shop’s better performing markets.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
