ByteDance: The Rise and Anxiety of an "Invisible Giant"
Hello everyone, I'm your financial journalist. Today we're talking about a very special company—ByteDance.
Why special? Because it's not listed on the stock market, so you can't buy its shares, yet it has quietly become the largest "invisible champion" in China's internet industry. Recently, the foreign media outlet The Information revealed some internal data from ByteDance for the first half of 2026. After reading it, my biggest takeaway is that we may have underestimated ByteDance's scale and overestimated the security of other major companies.
Below, I'll break down the key points of this news into five aspects in plain language, to show you exactly where ByteDance's strengths lie and what's making them anxious.
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1. Astonishing Scale: ByteDance Alone is Equivalent to Tencent + Alibaba
Previously, we referred to the three major internet giants as "BAT" (Baidu, Alibaba, Tencent). But that landscape has changed. If we look at ByteDance separately, its profitability is already putting significant pressure on the traditional giants.
1. Revenue Scale: Nearly Equal to the Sum of the Two Giants
- ByteDance: Revenue for the first half of 2026 was approximately 120 billion US dollars.
- Alibaba + Tencent: 75.3 billion + 59 billion = 134.3 billion US dollars.
- Interpretation: ByteDance's revenue is very close to the combined total of Alibaba and Tencent. This was unimaginable just a few years ago.
2. Profit Scale: Also in the Top Tier
- ByteDance: Net profit of 20 billion US dollars.
- Alibaba + Tencent: 5.3 billion + 16.8 billion = 22.1 billion US dollars.
- Interpretation: Not only does it earn more, but it does so with high efficiency. ByteDance's profit margin is very healthy, indicating that its business models (mainly advertising and e-commerce) are still highly effective.
3. The Most Concerning Aspect: Growth Rate
- ByteDance: Revenue in 2025 was 200 billion US dollars (year-on-year +29%), and for the first half of 2026 it was 120 billion US dollars (year-on-year +30%).
- Competitors: Tencent, Alibaba, Pinduoduo, Meituan, and others saw growth rates of around 10% for the first half of the year, with some even dropping to single digits.
- Plain Language Summary: While other companies are "maintaining their status quo" or growing slowly, ByteDance is "racing at high speed." At this rate, ByteDance's total revenue could soon exceed the combined total of Tencent and Alibaba. It's like you're driving at 120 miles per hour on the highway while the cars around you are only going 60 miles per hour—the gap will only widen.
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2. Growth Engine: Domestic Growth Stagnating, Overseas Growth Saving the Day
Why can ByteDance still maintain a high growth rate of 30%? The answer is simple: Domestically, it relies on inertia; internationally, it relies on explosive growth.
1. Domestic Business: Dividends Fading, Growth Slowing
- Current Situation: Domestic revenue accounts for over 60% of its total, but the growth rate is declining.
- Performance of the Three Pillars:
- E-commerce: GMV (Gross Merchandise Volume) growth rate dropped from 30% last year to 15% this year.
- Local Services (Delivery, Group Buying, etc.): Despite the intense competition in the delivery sector, the growth rate has dropped to around 30%.
- Advertising: As its main source of revenue, the growth rate is estimated to be between 10%-20%.
- Interpretation: The number of internet users in China is almost saturated, and it's becoming difficult to steal more time from users. Coupled with a generally weak consumer environment, it's extremely challenging to maintain high growth in the domestic market.
2. Overseas Business: The Real Growth Engine
- Current Situation: Overseas revenue accounts for over 30% of its total, with growth rates exceeding 50% last year, and it's expected to contribute more than 40% to this year's overall growth.
- Key Breakthrough: TikTok reached an agreement with the US government, resolving the crisis of potential closure or ban.
- Plain Language Summary: TikTok was previously restricted overseas, but now it's free to conduct advertising and e-commerce activities. Similar to Meta (Facebook's parent company) and Amazon, there's still huge potential for growth in TikTok's global advertising and e-commerce markets. ByteDance's future lies not in Beijing, but around the world.
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3. Strategic Anxiety: Borrowing 30 Billion to Focus on AI
Despite its strong profitability, ByteDance is also anxious. Why? Because AI (Artificial Intelligence) is the battlefield of the next decade, and ByteDance is somewhat falling behind in this area.
1. Huge Loan: The Largest in History
- ByteDance borrowed 30 billion US dollars from banks, the largest loan in its history.
- Purpose: To invest in AI infrastructure (computing power, data centers, etc.).
- Interpretation: Why would a company with such strong cash flow need to borrow so much money? Because AI is extremely costly, and there's no time to wait. This shows how seriously ByteDance takes AI; it's willing to go to any lengths necessary.
2. Comprehensive Layout, but Lagging in Large Model Capabilities
- Application Side: It's developing AI assistants like DouBao, office tools like FeiShu, and video generation tools like Seedance.
- Cloud Services: Its cloud services are second only to Alibaba, indicating it's also competing in the B2B (business-to-business) market.
- Chips: It's working on its own inference chips to reduce reliance on NVIDIA.
- Embarrassing Situation: In terms of basic large model capabilities, ByteDance lags behind domestic competitors like YueZhiDanMian, Alibaba, Zhipu, and DeepSeek.
3. Zhang Yiming's "Stubbornness"
- The news mentions that ByteDance has not been accused of using "distillation" (a controversial technique of training models by imitating others).
- Interpretation: ByteDance prefers to fall behind in the short term rather than take shortcuts. This reflects Zhang Yiming's consistent approach: aiming for the highest standards, not the lowest. He believes that with enough investment, technological breakthroughs are inevitable. This strategy carries high risks, but if successful, it will create a strong competitive advantage.
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4. Core Logic: The Ultimate Machine for Selling "Attention"
To understand ByteDance, you can't just look at its short-video and e-commerce services; you need to understand its underlying logic.
1. The Core Business is Not Short Videos, but Algorithms
- ByteDance's essence is an algorithm-driven platform for distributing attention.
- It uses algorithms to accurately predict what you like and want to buy, then sells your time to advertisers and merchants.
- Plain Language: Platforms like Douyin and TikTok are just the carriers; the real core is the algorithm that predicts your preferences. The stronger this algorithm, the more you'll spend time on its services, and the more money ByteDance earns.
2. Vague Business Boundaries, Unlimited Expansion
- Since its core is "attention," it can expand into many areas:
- Today, it sells video ads;
- Tomorrow, it adds product links within videos (e-commerce);
- The day after, it offers delivery services;
- The day after that, it provides AI-powered coding and video-making tools.
- Interpretation: This is why Meituan is so envious of ByteDance. Meituan can only focus on local services, while ByteDance can seamlessly transition from video viewing to shopping, delivery, and AI services. The longer users stay on its platforms, the more revenue opportunities it has. This is a perfect model for an "unlimited war."
3. Data Proof: Dominating User Time
- Among the top 50 most used apps in China, ByteDance's apps account for 40% of usage time, far exceeding Tencent's 29%.
- Interpretation: This means that nearly half of Chinese internet users spend their daily time on ByteDance's products (Douyin, TikTok, Jutu TouTiao, Xigua Video, etc.). Whoever controls users' time controls the traffic.
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5. Future Outlook: "Short Sellers" and "Long Sellers" of the Hengke Index
Finally, let's look at the investment perspective.
1. Why is ByteDance Considered the "Largest Short Seller" of the Hengke Index?
- Because ByteDance's businesses (e-commerce, local services, advertising) directly compete with companies listed on the Hengke Index (such as Meituan, JD.com, Alibaba, Tencent). The stronger ByteDance becomes, the more these companies' valuations are pressured. Investors in the Hengke Index are indirectly "shortselling" ByteDance.
2. Expecting a Listing: Leaving Room for Growth
- The author jokes, "I hope ByteDance lists soon, so there's room for growth in the Hengke Index."
- Interpretation: If ByteDance lists, it could become one of the world's highest-valued tech companies, changing the valuation logic of the entire tech sector. For investors, a ByteDance listing could be both a huge opportunity and a significant challenge (as it might draw away funds and attention from other companies).
3. Summary
- Short Term: ByteDance relies on the explosive growth of its overseas TikTok business and the implementation of AI applications in China to maintain high growth.
- Long Term: Whether ByteDance can make breakthroughs in AI will determine whether it can transform from a "traffic company" into a "tech giant."
- Risk Points: Overseas regulatory risks (although alleviated, they still exist), weak domestic consumption, and the long return cycle of AI investments.
In One Sentence:
ByteDance is no longer just a "short-video company"; it's a super business empire centered around algorithms, with a global market as its territory and AI as its future bet. It's using the profits from the Chinese market to gamble on the growth of the global market. For ordinary people, this means that the ads you see, the products you buy, and even the AI tools you use are likely influenced by ByteDance.