Shares of ByteDance, a key competitor in China, fell as the company’s losses widened, with users in the country spending less on its livestreaming services.
Kuaishou’s short video intensifies competition from ByteDance’s Douyin, the Chinese version of TikTok և online shopping groups such as Alibaba և Pinduoduo, which have also driven sales through livestreaming.
Shares of the company fell 11.3 percent in Hong Kong on Tuesday, clearing up to $ 14 billion in market capitalization in Quaishu. Kuaishou’s initial public offering backed by Chinese Internet group Tencent has raised more than $ 5.4 billion in February.
Kuayshu’s results come as Beijing tightens its grip on the country’s technology sector. The company is one of almost three dozen technology groups that have been told fix anti-competitive Practice Regulators have also developed new control rules live broadcast content : Restrict some video hosting tips.
Quaishu earns a significant portion of its revenue by taking the money users pay for small gifts on live streaming hosts such as virtual beer labels (Rmb1.5) or “golden dragons” (1400 Rmb).
Kuaishu monthly users
Four years ago, it made 95 percent of its revenue, but by March, three months later, users’ spending was cut by 20 percent year-on-year. Virtual gift sales accounted for only 42.6 percent of the quarter’s total investment, according to Kuaishu’s earnings report, which was released late Monday night.
The growth of the company’s advertising business compensated for the decline, in this sector revenue increased by 161% year on year. Advertising accounted for 50.3% of total revenue during the quarter.
Kuaishou’s total revenue was up 36.6% year-on-year to Rmb17bn, but sales of all three of its business lines fell to the research group below Bernstein. The omission was especially large for the business line that maintained the e-commerce business in Kuayshu.
The company’s operating loss for the quarter rose to 7.3 billion Rmb ($ 1.14 billion) from Rmb5 billion a year earlier.
Earnings have prompted Wall Street banks, including Morgan Stanley, to cut their share prices for Kuayshu. Analysts at Morgan Stanley note that Kuayshu’s growing investment, year-on-year losses, and weak cash flows have helped lower its target price.
Livestreaming e-commerce, which hosts online hosting products, is booming in China as the Covid-19 epidemic means shoppers stay home and shop on their smartphones.
But the competition with Duin, Alibaba, Pinduodu և JD.com is fierce.
“We continue to be wary of live streaming of Kuaishou e-commerce,” Bernstein analysts wrote.
Bernstein cited the cost of marketing and selling balloons in Kuayshu, which accounted for 69 percent of total revenue. The research team estimated that the amount paid by Kuaishou for each new user increased by Rmb65 per user during that period, compared to Rmb55 for the fourth quarter.
Kuayshu said he was investing to increase user base: engagement. The monthly users of its applications during the quarter reached 519.8 million, compared to 495.0 million last year.