- Kuaishou shares surged more than 160% on Friday on the Hong Kong Stock Exchange, raising $5.4 billion, the largest figure for a tech sector IPO since Uber raised $8.1 billion in its 2019 debut.
- At one point in Friday trading, Kuaishou surged as much as 194%
- The Friday price jump granted Kuaishou a market valuation of $160 billion, just below the $180 billion valuation reported for ByteDance, owner of its rival TikTok, last December.
- Kuaishou is partly backed by Chinese Internet giant Tencent.
- Kuaishou was founded in 2011 as a way for users to create “GIFs” (brief animated images) on their smartphones
The company eventually moved to making short videos as smartphone cameras rose in prominence and mainly makes money by taking a cut of “virtual gifts” that users buy from Kuaishou to give to streamers who make their favorite videos. As a result of the first-day price pop, Kuaishou’s chief executive officer and co-founder Su Hua’s 11.8% stake in the company is valued at nearly $19 billion. Cheng Yixiao, the company’s co-founder and chief of product, has a 9.2% stake worth almost $15 billion. Su and Cheng control Kuaishou by holding special stock that grants them 10 times the voting rights of ordinary shares. In the nine months to September 2020, Kuaishou reported an operating loss of $1.39 billion on revenues of $6.3 billion.
“For a sizeable IPO like this one I can’t recall any . . . reaching this sort of extraordinary performance” on day one, said Ronald Wan, chief executive and founder of Partners Capital, a Hong Kong investment firm.
Kuaishou’s main rival ByteDance is preparing for an IPO of its own in Hong Kong this year, the Financial Times reported. ByteDance’s Douyin app (the Chinese version of TikTok) alone had 602 million average monthly users in China last year, versus 460 million for Kuaishou, according to Analysys Mason, a global consultancy and research firm.
Despite Kuashiou’s successful debut, Chinese tech firms face a challenging regulatory climate – in November, the listing of Jack Ma’s payments firm Ant Group was cancelled by Beijing, while tech giant Alibaba, also controlled by billionaire Ma, is under an antitrust probe. Earlier this week, Ant Group agreed to restructure under pressure from Beijing regulators. Also in November, the Beijing government introduced new rules on live-streaming shopping, which could eventually impact Kuaishou as it seeks to move into e-commerce.