Despite its lack of presence on the global market, Kuaishou’s public offering debut in Hong Kong is receiving a massive response. Douyin and TikTok‘s biggest rival, Kuaishou is raking in billions from its IPO.
IPO leverages Kuaishou shares nearly thrice from its initial price
Tech Crunch reported today that Tencent-backed Kuaishou’s shares on Friday skyrocketed 194% to HK$338 ($43.6) apiece from its initial price at HK$115 ($14.8). This easily boosted Kuaishou’s market cap to nearly HK$1.4 trillion ($180 billion). With 265,2180,600 shares available for sale, the company approximately raked in $5.4 billion from the listing. Note that the figure does not include the overallotment option.
Kuaishou mainly has been receiving a lot of attention from institutional financiers and retail investors from China. The app is currently the most oversubscribed deal in Hong Kong. According to the South China Morning Post, Kuaishou attracted retail investor demand totalling $164.8 billion. The share on the grey market platform hosted by Phillip Securities Group grew to HK$322.8. Meanwhile, online broker Futu Securities noted that Kuaishou shares reached HK$421.
Kuaishou: behind the hype
Kuaishou is labelled as Douyin, TikTok’s Chinese version, biggest rival. It first started as a short video editor and sharing platform. After some time in the market, Kuaishou further added a live streaming feature through its app.
Currently, Kuaishou relies on three main monetization methods, and live streaming took up the majority of its revenue. With around 480 million monthly users and 58 million users spending on live videos monthly during the 11 months ended November, Kuaishou reported 47.6 yuan (7.36) in revenue on average through every paying users. Kuaishou also offers ads. Each user brings in 71.4 yuan ($11) in marketing revenue for the period.
The last monetization source comes from creators-generated hawk products. Kuaishou also reported a huge amount of gross merchandise value (GMV), calculated by measuring e-commerce transaction. During the same period, Kuaishou’s GMV exceeded 300 billion yuan ($51.4 billion). In comparison, Alibaba’s Taobao bazaar took in over 400 billion yuan in GMV for the twelve months ended December.
Kuaishou’s success is, however, currently loomed by the government’s regulatory risk. The Chinese government has tightened rules related to virtual gifs purchase. The new regulation bans users under 18 from virtual gifts purchase. In the future, platforms that offer such services will also need to limit users’ monthly spending on virtual gifts. While such regulations could limit Kuaishou’s prospectus, Kuaishou might not face bigger problems as long as it keeps on diversifying its business.