Kuaishou (1024.HK) is the leading short video platform in China. It ranks the third-largest video platform by DAU with a high level of user engagement. Kuaishou recently went IPO on the HK stock exchange and doubled the IPO price on its debut. Its market cap exceeded $210 billion.
Kuaishou is also the third-largest platform measured by user time. The large and active user traffic is valuable in the competition and breeds multiple monetization opportunities.
Kuaishou generates revenues from three sources: tips from live streaming, online ads, and fees charged on eCommerce transactions on the platform. The online ads revenue has been growing particularly fast.
The live streaming business' growth has been decelerating, in line with the overall live streaming industry. The challenging macro backdrop has negatively affected the customers' tipping behavior, and regulation headwinds also emerge.
The live streaming user additions have also been slowing down, and most new users tip less. The live streaming business could be the slow-growing cash cow business for Kuaishou going forward.
The high-margin & fast-growing online ads business is the next big thing for Kuaishou. Compared to Douyin, the large gap between user time and online ads market share indicates a significant monetization opportunity.
The ads monetization rate still has room to improve. Even compared to its peer companies in China, Kuaishou can grow its ads business by increasing ads load and ads pricing over time.
The eCommerce business is another growth driver for Kuaishou. Kuaishou commands a very high repurchasing rate due to its interactive live-streaming shopping experience and the close tie between KOLs and shoppers.
The management is not focusing on the monetization of the eCommerce business right now. The take rate gap with peers will close up over time.
Kuaoshou's user growth has been slowing down, although in line with the short video industry. Kuaishou needs to work harder to penetrate new user bases. Kuaishou's user engagement level has been picking up, especially after its version 8.0 update in the summer of 2020.
Overall, the future growth of Kuaishou hinges on increasing engagement and monetization opportunities for the existing user base. More user additions will be a plus, but lack of it won't hurt Kuaishou's thesis.
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