ByteDance's stock is experiencing a valuation storm triggered by the TikTok spin-off case.

The latest development is that if TikTok fails to be spun off from its parent company ByteDance by January 19, 2025, the day before the next president takes office, it will be banned in the US.

Facing market uncertainty, some investors choose to withdraw, while others see an opportunity to buy at the bottom.

Shadow of the spin-off case: ByteDance's share price hit

ByteDance rose rapidly globally with TikTok, and the US government is attempting to force ByteDance to spin off TikTok's US operations on national security grounds.

This potential spin-off, coupled with the silence of the US IPO market, makes TikTok's listing in the US seem even more distant.

Some investors are uneasy about ByteDance's future, and some ByteDance shareholders have begun selling their shares.

Early investors and supporters such as Coatue Management have begun selling some of their shares.

This move secures cash and stays away from the hot potato of politics.

However, Coatue cannot completely run away with the money. Coatue may not be able to sell its shares to any buyer who agrees to the price. ByteDance needs to approve the buyer, which is common among large private technology companies.

Low point of valuation: Comparison with Meta

ByteDance was once the world's most valuable private technology startup, with a valuation of up to $400 billion on the secondary market in early 2021. However, since then, despite strong financial performance, the valuation has plummeted.

In this turmoil, ByteDance's valuation has been significantly affected and is currently only one-fifth that of Meta (Facebook's parent company).

Despite this, ByteDance's growth rate is two to three times that of Meta.

Considering the company's size and growth rate, ByteDance's stock is "ridiculously cheap." This comparison shows that ByteDance's stock may be underestimated by the market.

Patient capital bottoms out: a good opportunity for contrarian investment

While many investors choose to withdraw, some long-term investors (patient capital) believe that ByteDance's stock is underestimated and are actively buying.

New York venture capital firm Lead Edge Capital is a representative example. Lead Edge Capital has invested over $100 million in ByteDance and is still actively buying shares.

The company's founder, Mitchell Green, believes that even in the worst-case scenario, ByteDance's stock remains extremely valuable.

He said in an interview, "I don't think people fully appreciate how big the Chinese business is and how small the US business is as a percentage of the overall company."

He represents the views of some patient capital: that ByteDance's long-term value has not been fundamentally compromised, and that its growth potential and global influence will drive its value back up.

Foreign monks have a hard time reciting sutras: listing is full of uncertainties

ByteDance's path to listing in the US has been closely watched by the market, but it is currently full of uncertainties.

Undoubtedly, TikTok has been an extremely successful product overseas, but it has fallen short in commercialization, mainly due to setbacks in its e-commerce business. As early as 2021, TikTok tested its e-commerce business in the UK and Indonesia, but in the following year, it achieved only 0.2% of its five-year goal of $3 trillion in GMV.

Compared to the prosperity of domestic live e-commerce, overseas live e-commerce is like comparing apples and oranges, and the path to listing is inevitably questioned.

Coupled with the political and legal issues surrounding TikTok in the US mentioned above, which directly affect ByteDance's listing plans in the US. It also faces disagreements among investors over its valuation and future outlook, as well as long-term challenges such as financial performance and fluctuations in growth rates.

The combined effect of these factors makes the timing and location of ByteDance's listing uncertain.