With a plus of around 160 percent, the Chinese video app Kuaishou has made a spectacular stock market debut. In this country, however, the application is largely unknown. Reason enough to take a closer look at it.
Kuaishou literally means “quick hand”. In China, the application is one of the biggest competitors of the video platform Douyin, which is known here as Tik Tok.
On the very first day of trading, the share price climbed from 115 to 300 Hong Kong dollars. That is roughly equivalent to 32 euros.
According to the Bloomberg news agency, this is the largest tech IPO since the ride-hailing service Uber in May 2019, making Kuaishou worth more than Twitter in purely arithmetical terms. Yet the company has yet to turn a profit since its inception.
Kuaishou vs. Tik Tok
Kuaishou was founded in March 2011 under the name “GIF Kuaishou.” As the name suggests, the app was originally intended for sharing GIFs. In November 2012, it was transformed into a video platform.
Thus, Kuaishou was already on the market four years before Tik Tok. According to its own information, the video app has around 300 million active users. This puts Kuaishou in a similar league to Twitter or Snapchat.
By comparison, Tik Tok says it has around 800 million monthly active users. Unlike Tik Tok, however, Kuaishou has not established itself in Europe and the USA. Although the app is also available in this country, it is only available in Chinese.
Expansion is complicated. Foreign governments are increasingly skeptical of Chinese tech companies when it comes to data protection and security.
Concept and functions of Kuaishou
Similar to Tik Tok, Kuaishou users can post short videos or create livestreams. However, the company is accused of copying its rival’s content and functions.
The company generates most of its revenue with in-app purchases. Viewers can give influencers digital gifts, for example. An animated flower costs the equivalent of about a few cents.
More expensive virtual gifts can sometimes cost several hundred euros. Kuaishou gives around half of the income generated to the video providers.
In addition to financing through advertisements, Kuaishou also operates its own online store. There, users can buy products that are advertised by some influencers and live streamers.
According to the Financial Times, Kuaishou generates most of its revenue from virtual gifts. In addition to the newly developed revenue sources via advertisements and online store, this is about 60 percent. Originally, it was as much as 90 percent.
Criticism and skepticism towards Chinese tech companies
Numerous Chinese corporations such as Alibaba and Tencent have gone public primarily in the United States in recent years. However, Kuaishou’s stock is only listed in Hong Kong. This is probably mainly due to the political and economic conflicts between the USA and China.
The run on the stock nevertheless reveals that the financial markets see great potential in Kuaishou. Numerous Chinese companies are hardly known outside the People’s Republic. But the Chinese market alone, with around one billion Internet users, holds enormous potential.
Despite the veritable run on the Kuaishou share, the company has to contend with some problems.
For example, the IPO has drawn the attention of the Chinese copyright organization CAVCA. It accuses the company that numerous users violate music copyright laws with their videos.
But that’s not all: The ongoing negative headlines about Tik Tok have caused a general distrust of Chinese tech companies with regard to data protection and security.
Critics accuse numerous companies of a lack of transparency and proximity to the communist state leadership.