TikTok Cuts 2022 Revenue Projections by 20% as Growth Slows: Report

TikTok has pulled back its global revenue targets for 2022 by about 20%, down from between $12 billion and $14.5 billion USD to a more modest $10 billion, amidst a slump in online spending — reports the Financial Times.

According to four sources familiar with the decision, TikTok CEO Shou Zi Chew announced the revised revenue projections during a virtual “all-hands” meeting in September.

During the meeting, Chew chastized employees for not generating enough income from advertising and eCommerce this year. However, current and former employees told the Financial Times that TikTok’s revenue problems actually stem from overspending in areas like salaries and social events.

TikTok regularly hosts events around the globe, flying teams across continents and booking luxury venues and hotels. Two sources said TikTok spent £2.5 million on one recent weekend-long company event, called “Evolve,” that was hosted in Spain.

What’s more, the company has been offering six-figure salaries for relatively junior roles to lure talent away from competitors.

TikTok’s Chinese parent company, ByteDance, is currently facing a government crackdown on its home turf. ByteDance has decided to delay its Hong Kong IPO, which was originally supposed to take place this year, as a result.

TikTok’s main driver of revenue, online advertising, has also entered a bit of a lull this year. Even though eMarketer estimates that U.S. advertisers will spend 3.6% more money — about $65.3 billion — on social media this year than they did in 2021,  the market grew by 10 times as much last year.

To make matters worse, TikTok has seen hundreds of departures in recent months. Management ruffled plenty of feathers when it demanded that workers return to the office for at least two days a week starting in September.

The tech industry as a whole hasn’t been doing too hot lately, and social media companies are no exception. TikTok is only one of many top companies that are settling on less ambitious goals for revenue and growth as the global economic climate worsens.

Meta, which owns Facebook and Instagram, instituted a hiring freeze in September and announced plans to cut spending. The social media giant will reportedly axe “thousands” of jobs this week after posting its second straight quarterly decline in revenue during Q3.

Even if TikTok only posts $10 billion in revenue for 2022, that will still be an order of magnitude higher than the $1 billion in revenue the platform generated in 2020. TikTok still leads the global market in short-form video content by far, though Instagram’s Reels is hot on its heels.