In reaction to declining sales, TikTok has reduced its global ad income target by about $2 billion, sources said the Financial Times in a piece published on Wednesday.
While TikTok CEO Shou Zi Chew put the blame for poor performance on the company's employees, sources informed the Financial Times that the company is also to blame for blowing money on exorbitant salaries and expensive parties.
In a virtual all-hands meeting in late September, Chew criticized employees for a lack of sales in advertising and e-commerce, which account for the majority of the social platform's income. This led to the revision of the prediction, according to four sources who spoke to the Financial Times.
The CEO of TikTok reportedly cited insufficient ad and e-commerce sales made by staff as the reason for the app's decline.
However, sources at TikTok told the FT that part of the reason for the company's lower ad revenue is due to spending.
According to TikTok staff, the company wastes money on lavish parties and excessive compensation.
According to TikTok, personnel in China have access to user data from Europe.
The sources claimed TikTok has been paying junior-level employees six-figure wages to snare talent from rival apps, and that ByteDance-owned company is also to blame for the revised prediction.
Another factor contributing to TikTok's inability to meet its income targets may be spending on significant social events. Two persons familiar with TikTok's financial records informed the Financial Times that the business apparently spent $2.9 million on an internal conference named "Evolve" that took place in Spain.
The FT claims that the corporation has also flown teams throughout the globe to attend events held at opulent hotels and locations. Late in September, employees throughout Europe flocked to a celebration in a city close to Barcelona. The US sales team was flown to New Orleans a month after that, and the Latin America team was dispatched to Sao Paulo at the end of October, according to the Financial Times.
TikTok has a difficult time reaching its anticipated ad revenue projections this year, despite the fact that its overall earnings are still increasing. A 30% decrease from its initial revenue target of $12 billion to $14.5 billion is predicted by the latest projection, which now projects revenues of $10 billion.
The adjustments come as businesses start cutting their advertising spending in anticipation of a market slump and as rivals like Meta and Snap start implementing mass layoffs in an effort to cut expenses.
By the time of writing, Insider had not received a comment from TikTok.