Chinese app giant TikTok has reportedly reduced its global ad revenue forecast for 2022 by at least $2 billion, owing to a general slump in online spending observed by many companies.
TikTok Scales Back Ad Revenue Forecast
Following multiple reports, this ad sales target markdown comes on the heels of a global downturn that has dramatically affected several tech giants, including Google and Meta, the latter of which is currently undergoing mass layoffs.
The scaled-back forecast reflects a global marketing expenditure decline as businesses and consumers tighten budgets and get ready to weather a potential recession.
Bloomberg tells us that numerous of the biggest companies in the world, such as Alphabet Inc., Amazon.com Inc., Meta, and Microsoft Corp., have reported results that largely fell short of expectations, reducing their market valuations by hundreds of millions to billions of dollars.
According to unnamed sources involved closely with the Chinese-owned app, TikTok's ad forecast has been reduced from at least $12 billion for 2022 to $10 billion. First, word of this story spread after TikTok's top executive Shou Zi Chew briefed a select group of staff members during a recent company meeting.
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As reported by Financial Times, employees present at the meeting were blamed for not generating enough e-commerce and advertising sales, which together constitute the majority of the app's revenue drivers.
Financial Times also informs us that anonymous company sources have revealed how the company has overspent in other areas, including salaries and external events.
As per unnamed sources, ByteDance will not push through a Hong Kong IPO, making it even less likely to happen anytime soon.
ByteDance's TikTok previously abandoned plans to list the company outside of China after the Chinese government tightened regulations on homegrown big tech companies.
Chinese tech giants were reportedly focused more on buying majority stakes in foreign companies as they sought global expansion to counteract slowing growth at home in China.
Back in April, TikTok dominated tech earnings rankings as the Chinese-based app continued its growth amid rising inflation, the Russian invasion of Ukraine, Apple's privacy changes, and a general pullback in ad spending. Lagging behind the list were Facebook, Google, Amazon, and Twitter.
Based on Insider Intelligence's forecast, TikTok will garner 755 million monthly users globally in 2022, and its market share in social networking could top 20% this year or nearly 25% by 2024.
According to anonymous sources cited by the Financial Times, TikTok's growth is still remarkable, having increased from the platform's $1 billion in revenue in 2020. The app continues to have the fastest growth rate and is very popular with young users in the US and the UK. According to reports, the two economies are the app's largest market.
But due to Beijing's domestic crackdown on internet companies and Washington's deep concerns about the services, ByteDance has struggled to maintain its position as the most valuable startup in the world.
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