More than 262m Chinese users check the Kuaishou app an average of 10 times a day © Bloomberg

Shares in Kuaishou nearly tripled on their first day of trading in Hong Kong, propelling the valuation of the Chinese viral video app to $160bn, close to that of ByteDance, the owner of its chief rival TikTok.

The company’s stock gained as much as 194 per cent on Friday after it raised about $5.4bn in its initial public offering, the biggest in the tech industry since Uber raised more than $8bn in 2019. They closed about 160 per cent higher.

ByteDance last raised money at a $180bn valuation, and is also considering a Hong Kong listing this year for some of its China businesses, according to people close to the company.

“For a sizeable IPO like this one I can’t recall any . . . reaching this sort of extraordinary performance” on day one, said Ronald Wan, chief executive and founder of Hong Kong investment firm Partners Capital.

The first-day pop boosted the value of Kuaishou chief executive Su Hua’s 11.8 per cent stake in the group to almost $19bn. The 9.2 per cent stake held by Cheng Yixiao, the company’s founder and chief of product, is also worth nearly $15bn. The two men effectively control the company through a special class of stock with 10 times the voting power of ordinary shares.

Early stage backer 5Y Capital holds a 13.7 per cent stake worth $21.8bn. Its initial $1.3m investment alone is now worth $13.8bn — a 1,045,925 per cent gain that makes it one of the best venture capital bets of all time. 

DCM Ventures, Kuaishou’s second outside investor, put in $50m over several financing rounds for a stake now worth $12bn.

“We thought short video would be big in China, but Kuaishou has exceeded our expectations and hence we’re in a happy place now,” said partner David Chao.

Cheng founded Kuaishou about a decade ago as a tool for users to create GIFs — short animated images — on smartphones. The company pivoted toward short videos as smartphone cameras and data networks became faster and more powerful.

More than 262m Chinese users check the Kuaishou app an average of 10 times a day, spending an average of 86 minutes watching videos and chatting with the creators who make them.

These interactions produce the app’s main revenue stream, as Kuaishou takes a cut of the tips viewers shower on content creators. These include virtual gifts such as stickers that can cost up to Rmb1,400 ($216) each. Such tips contributed 62 per cent of Kuaishou’s revenue in the nine months to September last year.

Total revenue in the period rose 49 per cent from a year earlier to Rmb41bn as it reported a Rmb9bn operating loss.

Column chart of Revenue (Rmb bn) showing Kuaishou diversifies its revenue streams

Kuaishou’s buoyant debut could pave the way for its much larger rival ByteDance to move quickly towards its own listing. ByteDance’s Douyin app had 602m average monthly users in China last year, versus Kuaishou’s 460m, according to Analysys.

Chinese tech companies face an increasingly uncertain regulatory environment. The $37bn listing of payments firm Ant Group was halted by Beijing at the last minute in November, while its ecommerce affiliate Alibaba is under an antitrust investigation.

Livestreaming rules announced in November have tightened controls on tipping on platforms such as Kuaishou. Regulators are also scrutinising livestreaming ecommerce, where video hosts promote goods to shoppers, a growing business for the company.

Kuaishou is one of many tech groups to benefit from the backing of Chinese internet group Tencent, which holds a 17.8 per cent stake.

Tencent’s major holdings
CompanyOwnership %Value of stake
KE Holdings12%$9bn
SEA ltd25%$29bn
Sources: Capital IQ, Bernstein, company filings
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