Shares in TikTok rival Kuaishou virtually triple on market debut | IPOs

The shares of the Chinese video app Kuaishou nearly tripled on its first day of trading in Hong Kong, bringing TikTok’s main competitor a market value of £ 131 billion.

The short-form video site’s debut on the Hong Kong Stock Exchange on Friday was one of the most highly anticipated IPOs this year, grossing $ 5.4 billion (£ 4 billion), the largest in the tech sector since Uber raised more than 8 billion . USD in 2019.

The company’s stock rose 194% in early Friday trading to HK $ 338 (£ 31.75) from the market price of HK $ 115.

Kuaishou, which posted a $ 1.1 billion loss last year, competes in China with ByteDance, the owner of TikTok and its Chinese sister app Douyin. The company said it has approximately 300 million active users every day who spend an average of 86 minutes or more on the app.

It makes money from activities, including a small snippet of the “tips” users leave for the creators who create content they particularly like. These come in the form of virtual gifts such as small digital “stickers” of objects that make up around 62% of total sales. Content creators make up about 26% of the app’s 769 million monthly active users.

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It also makes money on live streaming ecommerce, sometimes facing celebrities.

Kuaishou’s revenue rose from $ 1.3 billion in 2017 to $ 6.2 billion in the nine months ended September 30, 2020, but still posted a loss of $ 1.1 billion.

The company is practically controlled by Su Hua, its managing director, and Cheng Yixiao, the company’s founder and chief product officer, through a special class of shares that gives them ten times the voting rights of common shares.

The stratospheric surge in Kuaishou shares has increased the value of Hua’s 11.8% stake to more than $ 21 billion. Yixiao’s 9.2% stake is now worth nearly $ 17 billion.

Other major shareholders are Tencent, which has interests in a variety of companies including Universal Music and Spotify. It controls 17.8% which is now worth $ 32 billion.

Kuaishou was founded in 2012, originally as an app that allows users to create animated gifs or images on mobile phones. As smartphone technology hit the market and cellular networks came up to process large amounts of user data, the company focused on short videos.

The company’s successful debut is being closely watched by Bytedance, previously rumored to be considering an IPO in Hong Kong, despite Chinese tech companies having faced regulatory uncertainty lately.

In November, Jack Ma’s mobile payment company Ant Group, with a double listing in Hong Kong and Shanghai planned to be the largest share offering in history, was suspended by the Chinese authorities at the last minute.

Last month, Chinese regulators launched an antimonopoly investigation into Alibaba, the online shopping and cloud computing giant also controlled by Ma.

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