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Summary
- Video-sharing mobile app Kuaishou began trading on Hong Kong stock exchange, with shares soaring ~200% at the time of market debut.
- Kuaishou offers live streaming, video and image sharing services.
- It competes with Douyin, the Chinese version of short video sharing app TikTok.
The post-pandemic period would belong to technology. Lending weight to this notion is the recent enormously successful debut of Chinese firm Kuaishou Technology that offers a video-sharing mobile app.
Last week on 5 February 2021, Kuaishou Technology experienced a blockbuster debut on the Hong Kong stock exchange, with its shares soaring almost 200% to open at HKD 338.
Image source: © Ileezhun | Megapixl.com
Understanding Going Public/IPO
IPO Details
The initial public offering (IPO) raised USD 5.32 billion. The shares were priced at HKD 115. Prior to issuing of over-allotment shares, 365.2 million shares were sold to investors. The market value of the company based on the IPO price stood at USD 60.9 billion.
About Kuaishou Technology
The firm was founded by former Google employees Cheng Yixiao and Su Hua. They started the firm in the year 2011 with a mobile app, allowing users to create GIFs, the animated images. The firm launched its short video and social media platform in the year 2013, and by 2016 it added live streaming to its offerings. The app boasts of a monthly active user base of 769 million.
The services offered include recording and sharing short videos, live streaming, and images.
How Kuaishou Generates Revenue, and What Are The Challenges?
Kuaishou, which means first hand, ranks second behind Douyin, when it comes to the number of daily users. Douyin is the domestic version of global hit TikTok.
Also Read: TikTok Jumping Through Hoops
Kuaishou created a record in Hong Kong for the huge number of retail investors subscribing to its shares. This was the world's biggest internet IPO after Uber's IPO in May 2019 that had USD 8.1 billion.
Revenue Sources: The main revenue comes from its live-streaming business, which comprises user purchases of virtual gifts for their favourite streamers. The online marketing and advertising services also contribute to its revenue. Additionally, the firm has commenced e-commerce and games venturing, enabling the app users to buy items from streamers; however, not all of it directly translates into the revenue.
Challenges: The firm operates in the midst of a highly competitive market and competes with local platforms like Momo Inc. and Joyy Inc. Also, Tencent Holdings Limited, a major investor in the firm, has rolled out its short video feature, further heating up the competition.
The IPO has been undertaken at a time when technology players are facing stringent scrutiny from Chinese authorities to manage the digital platforms' monopoly. The market experts, including both the supporters and rivals, were keeping an eye on the IPO of Kuaishou to see if it succeeds or stumbles. However, to the delight of its supporters, its debut was a massive success.
