ByteDance Rival Sees Shares Surge On Debut

Chinese short video app Kuaishou has carried out the world’s highest-value stock market offering since 2019, as it saw its shares rise 161 percent on their first day of trading.

Shares in the company, the main competitor to TikTok owner ByteDance in China, closed at 300 Hong Kong dollars (£28.32) on Friday, up from their 115 HKD issuing price.

Kuaishou raised some 41.28 HKD in the offering, the equivalent of $5.32bn (£3.87bn), the biggest tech listing since Uber’s IPO raised more than $8bn in May 2019 and the biggest offering worldwide since Saudi Aramco went public in December 2019.

The share rise valued Kuaishou at about $160bn, close to the valuation of larger rival ByteDance, whose last round of funding valued it at $180bn.

Live-streaming cash

ByteDance is also reportedly considering a Hong Kong listing this year for some of its China businesses.

Kuaishou started off about ten years ago with software for generating animated GIFs on a mobile phone, then shifted to short videos with the rise of more powerful smartphone cameras and data networks.

Its various platforms currently count more than 300 million daily active users, with most of its revenue generated from live-streaming events that allow users to purchase virtual gifts to give as tips to content creators.

Live-streaming transactions accounted for 84 percent of revenue in 2019, and was supplemented by online advertising, according to a regulatory filing.

Investor gains

David Chao, co-founder and general partner of Silicon Valley venture capital firm DCM, which was one of Kuaishou’s first investors, said the company was one of the earliest to focus on live-streaming and virtual goods.

Such revenue sources are only beginning to emerge in the US, Chao added.

DCM holds a 9.2 percent stake in Kuaishou, a $50m investment now worth about $12bn.

5Y Capital, another early investor, holds a 13.7 percent stake in Kuaishou, and its initial $1.3m investment alone is now worth $13.8bn, a 1,045,925 percent gain.

The company’s chief executive, Su Hua, saw his 11.8 percent stake valued at nearly $19bn, with the 9.2 percent stake held by founder and product chief Cheng Yixiao valued at nearly $15bn.

Regulatory pressure

Hong Kong has become a popular venue for Chinese tech listings, with Alibaba, NetEase and JD.com holding secondary offerings there.

Amidst its success, Kuaishou cautioned that it faces significant challenges, not only from competition with ByteDance but also due to an increasingly tight regulatory environment in China.

The country announced new livestreaming rules in November that have increased controls on tipping on platforms such as Kuaishou, and regulators are also scrutinising livestreaming e-commerce, a growing area for the company.