TikTok CEO Shou Zi Chew and Vivian Kao attend The 2022 Met Gala.
Theo Wargo/WireImage
TikTok’s CEO blamed staff for not making enough ad and e-commerce sales, the Financial Times reported.
But sources at TikTok told the FT the firm’s spending is partly to blame for lower ad revenue.
Employees at TikTok said that the firm is burning money on high salaries and expensive parties.
TikTok has cut its global ad revenue target by around $2 billion in response to slumping sales, sources told the Financial Times in a report published Wednesday.
And while TikTok CEO Shou Zi Chew blamed staffers for underperforming, sources told the Financial Times that the company is also at fault for burning cash on inflated salaries and swanky parties.
According to four sources speaking to the Financial Times, the revised forecast came after Chew called out employees for a lack of sales in advertising and e-commerce — where the bulk of the social platform’s profits come from — during a virtual all-hands meeting in late September.
But the sources said the ByteDance-owned company is also to blame for the lowered projection, claiming TikTok has been offering junior-level employees six-figure salaries to poach talent from competitors.
Spending on large social events may be another reason why TikTok is struggling to reach its revenue goals. Two sources with knowledge of TikTok’s budgets told the FT that the company reportedly spent $2.9 million on an internal event called “Evolve” held in Spain.
The company has also allegedly flown teams across the world to attend events organized at luxury venues and hotels, according to the FT. In late September, European staff flocked to a party in a city near Barcelona. A month later, the US sales team was flown to New Orleans, and at the end of October, the Latin America team was sent to Sao Paulo, the FT reported.
Even though TikTok’s overall earnings continues to grow, the platform struggled to meet its projected ad revenue targets this year. The updated projection forecasts $10 billion in revenue, a 30% drop from its original revenue goal of $12 billion to $14.5 billion.
The changes come as companies begin slashing their advertising budgets to prepare for a market downturn, and as competitors like Meta and Snap begin rolling out mass layoffs in an attempt to reduce costs.
TikTok did not respond to Insider’s request for comment by the time of publication.