ByteDance’s share of major competitors in China fell after the company’s losses widened as Chinese users showed increasing signs that they were spending less on livestreaming services.
Kuaishou’s short video app faces fierce competition from online shopping groups such as ByteDance’s Douyin, TikTok’s Chinese version, and Alibaba and Pinduoduo, which promote their products through livestreaming.
The company’s stock fell 11.3% in Hong Kong on Tuesday, eliminating $ 14 billion from Kuaishou’s market capitalization.Kuaishou Initial Public Offering Supported by Chinese Internet Group Tencent Raised over $ 5.4 billion During February.
The result of the good move comes from Beijing strengthening the scrutiny of the country’s technology sector. The company is one of almost 30 technology groups that are said to be. Correct anti-competition practice.Regulators are also developing new rules to control Livestreaming content Limit the video host chip.
Kuaishou earns a significant portion of its revenue by reducing the amount of money users pay to give small gifts to livestreaming hosts such as virtual beer stickers (Rmb1.5) and “Golden Dragon” (Rmb1,400). doing.
Kuaishou Monthly User
Four years ago, we earned 95% of our revenue this way, but in the three months to March, such spending by users decreased by 20% year-on-year. According to the Kuaishou Revenue Report released late Monday, virtual gift sales accounted for only 42.6 percent of total quarterly sales.
Growth in the company’s advertising business helped offset the decline, with revenue in this segment increasing 161% year-over-year. Advertising accounted for 50.3% of total revenue for the quarter.
Kuaishou’s total sales were RMB17 billion, up 36.6% year-on-year, but sales of all three business lines were below estimates by research group Bernstein. Especially in the business of running a good e-commerce business, mistakes were big.
The company’s operating loss increased from RMB 5 billion in the year-ago quarter to RMB 7.3 billion ($ 1.14 billion) in the quarter.
Earnings figures prompted Wall Street banks, including Morgan Stanley, to lower their lucrative stock price targets. Analysts at Morgan Stanley said higher investment in Kuaishou, higher expected loss per year, and lower livestreaming earnings helped lower target prices.
Livestreaming e-commerce, where online hosts market their products to users, is booming in China as shoppers stay home and buy on their smartphones due to the Covid-19 pandemic.
However, competition with Douyin, Alibaba, Pinduoduo and JD.com is fierce.
“We remain cautious about the growth of Kuaishou livestreaming e-commerce,” wrote an analyst at Bernstein.
Bernstein also pointed out a surge in sales and marketing costs, which is equivalent to 69% of Kuaishou’s sales. The research group estimated that the amount Kuaishou paid to acquire each new user increased from RMB 55 in the fourth quarter to RMB 65 per user during the period.
Kuaishou said he is investing to expand his user base and engagement. Monthly users of the app reached 519.8 million during the quarter, up from 495.0 million in the previous year.
TikTok’s major Chinese rival stocks fall on fear of growth
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