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Kuaishou advertisement in Beijing:
The video app goes public in Hong Kong
Photo: WU HONG / EPA-EFE / Shutterstock
The Chinese app Kuaishou has more users than Twitter or Snapchat - but who in Germany or elsewhere in the western world would have heard of it?
Awareness could increase in the future, however, because the company goes public in Hong Kong on Friday.
Kuaishou is a video app, comparable to the TikTok app belonging to the Chinese Bytedance group, which is also Kuaishou's largest competitor in the People's Republic.
Users present themselves on these smartphone and computer programs in short videos or longer live streams, be it playing video games, dancing, cooking or whatever activity.
Kuaishou, which was started in 2011 as a pure program for the distribution of mini videos, has achieved considerable popularity in recent years with this idea: the number of daily active users rose to 302 million according to the IPO documents.
After all, such a user spends an average of more than 85 minutes with the app every day.
For comparison: Snapchat recently had around 250 million daily users worldwide.
Around 776 million people are active at Kuaishou every month (Twitter recently had around 330 million monthly active users worldwide).
Bytedance's TikTok, with more than 800 million monthly users recently, is apparently still slightly ahead.
Strong sales growth, but red numbers
To turn traffic into profits, the makers of Kuaishou have come up with different ways.
Originally, the company's main source of revenue was virtual gifts that viewers could give to the protagonists of live streams or videos.
As a token of their appreciation, users donate certain stickers that fly across the screen during a stream.
These cost money, part of which goes to the streamer, but another part ends up with the company.
According to the Financial Times, these virtual gifts originally made up more than 90 percent of Kuaishou's sales.
In the meantime, however, the share has decreased to a little more than 60 percent - the company has opened up other sources of income.
For example, the share of advertising revenue has risen sharply.
In addition, Kuaishou benefits from the e-commerce that its streamers operate via the platform - part of these sales also end up in the company's coffers.
Overall, Kuaishou achieved sales of around 39 billion Renminbi (around five billion euros) in 2019, according to the IPO papers.
In the first six months of 2020, sales were already more than 25 billion renminbi.
The fact that Kuaishou is currently still trimmed for growth is also evident in the business figures: In the first six months of last year alone, there was a loss of 68 billion renminbi (8.6 billion euros).
According to the documents for the IPO, the company has not closed a single year with a profit since at least 2017.
Investors are scrambling for the papers
There are also problems with which the start-up is struggling.
According to observers, stricter rules for streaming services in China could become a burden.
Just days before the IPO, the Chinese copyright organization CAVCA stepped in, accusing Kuaishou of numerous users violating music copyrights in their videos.
Investors on the stock exchange apparently believe in the company, which owns the Chinese tech group Tencent (around 22 percent of the shares) and the shareholders 5Y Capital (around 17 percent), DCM (9 percent) and DST Global (6.4 percent) has in the back.
Well-known US investors such as fund giants Blackrock and Fidelity are among the anchor financiers in the IPO, according to "Nikkei Asia".
According to a report by Bloomberg, investors are already scrambling for the papers before the official debut next Friday on the gray market.
So you pay up to twice the issue price of 115 Hong Kong dollars for the Kuaishou shares.
With a volume of around $ 5.4 billion, it is not a record IPO.
As is well known, the Chinese Alibaba subsidiary Ant Financial wanted to put it on the floor in Hong Kong and Shanghai last year with an issue volume of around 37 billion dollars - before the authorities in the People's Republic put an end to the plans.
Kuaishou has an issuing volume of around 5.4 billion dollars, which corresponds to a market valuation of around 60 billion dollars.
According to Bloomberg, it promises to be one of the most successful IPOs in Hong Kong to date.
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