ByteDance accelerates downsizing and completely divests a major business: sells all Dolphin shares for 20 million

Editor | Wang Yafeng

According to Leifeng.com, on February 21, Hualin Securities announced that it had signed an agreement to purchase Dolphin Stock App, a securities business under ByteDance. Hualin Securities intends to acquire 100% of Wenxing Online's equity held by Jiangsu Toutiao.

The transaction is expected to be valued at RMB 20 million. After the transaction is completed, ByteDance will shut down and no longer operate the Dolphin Stock App and the corresponding securities business, and Hualin Securities will continue to serve the users of the App.

A person related to ByteDance revealed that in addition to Dolphin Stock App and Wenxing Online, other entities of its securities business are also in contact with potential transaction parties or in the process of internal closure, and ByteDance will completely divest its securities business.

The Qichacha APP shows that Wenxing Online was established in April 2017 and is a wholly-owned subsidiary of Jiangsu Toutiao Information Technology Co., Ltd., with ByteDance's Zhang Yiming as the actual controller.

On January 19 this year, multiple sources revealed that ByteDance will eliminate its investment business as a whole, involving about 100 employees. Among them, Zhao Pengyuan, head of strategic investment, and some employees of the strategic investment division may abandon the investment business and merge it into the strategic business; the financial investment division will be completely disbanded.

A relevant person in charge of ByteDance responded that the company conducted an inventory and analysis of its business at the beginning of the year and decided to strengthen its business focus, reduce investments with low synergy, and disperse employees of the strategic investment department to various business lines.

ByteDance’s layoff of its strategic investment department has attracted widespread attention. For the first time, it has been confirmed and made public that a major Internet company has put the brakes on its non-core business .

This time, ByteDance's official withdrawal from the securities business was not without warning.

Earlier, there were rumors that ByteDance would withdraw from the securities business, and ByteDance had also made it clear that it would no longer engage in securities business in the future.

Last September, LatePost reported that ByteDance was planning to sell its securities business, with an overall valuation of about RMB 500 million to 1 billion. ByteDance has communicated with CICC, CITIC, Fosun Group, Niuguwang, and Eastmoney, two of which gave letters of intent to invest.

In response, ByteDance publicly stated that the company was shrinking its financial-related businesses and did have plans to sell securities. Industry insiders believe that ByteDance's sale of its securities business was a proactive business shrinkage in response to regulatory requirements.

After ByteDance confirmed that it had plans to sell securities, an insider of ByteDance said that as soon as the news was released, the HR team contacted relevant employees to discuss follow-up solutions, and the conditions given were either internal transfer or leaving on October 8, and the compensation plan was N+2. Another relevant person revealed that since most of the employees were new, N+2 did not receive support from relevant employees.

In addition, Bytedance's four major education businesses have also been put on hold. On February 18, Dali Education's four major online education businesses, "GOGOKID", "Ni Pai Yi", "Qingbei Xiaoban" and "Tangyuan English", all posted suspension notices on their official websites and officially stopped services before the end of last year.

During the process of selling its securities division, ByteDance privately disclosed to all parties involved that the number of platform users of the Dolphin Stock App was approximately 12.46 million as of September 2021.

According to research data from a third-party evaluation agency, as of August 2021, the monthly active users of the Dolphin Stock App were 319,200.

In 2015, ByteDance began to build a financial business team, initially developing a simulated stock trading product. The predecessor of Dolphin Stock was "Na-Mei Stock", which was launched in 2017. In 2019, Na-Mei Stock was officially renamed Dolphin Stock.

At the beginning of 2020, Dolphin Stocks began to provide account opening and real-time trading functions to customers. Its profit model is mainly to provide value-added services such as paid stock investment courses and stock consulting recommendations.

However, since ByteDance does not hold a financial license, these functions must be completed by jumping to the service page provided by the brokerage firm. Dolphin Stocks is not involved in any aspects related to the securities business, has no commission sharing, and cannot directly open an account or conduct real-time transactions.

Therefore, after Hualin Securities, which has a securities license, completes the acquisition, the Dolphin Stock App will be upgraded from a "stock quote" software to a "securities trading" software.

According to data, ByteDance's securities business is mainly composed of three parts, namely the stock quotation software Dolphin Stocks, and two Hong Kong brokerages Squirrel Securities and Stellar Securities.

Therefore, in addition to the Dolphin App, ByteDance actually has two other Hong Kong brokerages for sale.

In 2019, ByteDance began to develop its Hong Kong and US stock business. At the end of 2019, Squirrel Securities was registered in Hong Kong, which can provide securities and futures trading services, provide opinions on securities, futures contracts, and institutional financing, and provide asset management services. In addition, in March 2021, ByteDance renamed the Hong Kong-based brokerage Asia Pacific Securities (established in 1996) that it had previously acquired to Stellar Securities.