[ad_1]
Shares of ByteDance’s main competitor in China fell after the company’s losses widened due to growing signs that the country’s users are spending less on its live streaming services.
Kuaishou’s short video app faces stiff competition from ByteDance’s Douyin, the Chinese version of TikTok, and online shopping groups like Alibaba and Pinduoduo, which have also boosted product sales by streaming on direct.
The company’s shares fell as much as 11.3% in Hong Kong on Tuesday, removing up to $ 14 billion from Kuaishou’s market capitalization. Kuaishou’s initial public offering, backed by Chinese internet group Tencent, raised more than $ 5.4 billion in February.
Kuaishou’s results come as Beijing intensifies its examination of the country’s technology sector. The company is one of nearly three dozen technology groups reported to solve the competition practices. Regulators have also implemented new rules to control live content and limit some video host suggestions.
Kuaishou earns a significant portion of his income by reducing the money users pay to shower small gifts to live hosts, such as virtual beer stickers (Rmb1.5) or “golden dragons” (Rmb1.400).
519.8m
Monthly Kuaishou users
Four years ago, it earned 95% of its revenue in this way, but in the three months following March, that spending by users fell 20% year-on-year. Virtual gift sales only contributed 42.6% of total revenue for the quarter, according to Kuaishou’s earnings report released Monday afternoon.
The growth of the company’s advertising business helped offset the fall, with revenues in this segment rising 161% year-on-year. Advertising accounted for 50.3% of total revenue during the quarter.
Kuaishou’s total revenue rose 36.6% year-on-year to Rmb17bn, but sales from the three business lines fell short of estimates by research group Bernstein. The lack was particularly important for the line of business that Kuaishou’s e-commerce business has.
The company’s operating loss expanded to $ 7.3 billion ($ 1.14 billion) during the quarter, up from $ 5 billion a year earlier.
Profit figures caused Wall Street banks, including Morgan Stanley, to cut their stock price targets for Kuaishou. Morgan Stanley analysts said Kuaishou’s growing investment, the biggest expected loss for the year and weaker live streaming revenue contributed to its target price reduction.
Livestreaming e-commerce, in which online hosts offer products to users, has grown in China as the Covid-19 pandemic meant shoppers stayed home and shopped on their smartphones.
But competition with Douyin, Alibaba, Pinduoduo and JD.com is fierce.
“We remain more cautious about Kuaishou’s live growth in e-commerce,” Bernstein analysts wrote.
Bernstein also noted Kuaishou’s sales and marketing expenses, which accounted for 69% of revenue. The research group estimated that the amount Kuaishou paid to acquire each new user increased to Rmb65 per user during the period, compared to Rmb55 in the fourth quarter.
Kuaishou said he was investing to grow his user base and commitment. Monthly users of its apps reached 519.8 million during the quarter, compared to 495.0 million the previous year.
[ad_2]
Source link
