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Analysis | How Kuaishou, Hong Kong’s hottest IPO in 2021, became a cautionary tale of overexuberance in Chinese tech stocks
- In the broader crash of Chinese tech stocks, Kuaishou has become the worst-performing listed firm in this market
- Kuaishou has lost about 80 per cent of its value even though it has not been a direct target of Beijing’s crackdown on China’s internet industry
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Kuaishou Technology, operator of China’s second-largest short video-sharing app, gave investors plenty to cheer about earlier this year when it launched the most sought-after initial public offering in the annals of Hong Kong’s stock market – drawing subscriptions of 1,204 times what was on offer.
Those who managed to get shares at the offer price of HK$115 received a windfall when the stock started trading at HK$338 on February 5, offering subscribers a return of 190 per cent on their investment. Shares of Beijing-based Kuaishou, which posted a net loss 116.6 billion yuan (US$18 billion) in 2020, reached a peak of HK$417 two weeks after its trading debut, giving the company a valuation of more than US$160 billion.
Fast-forward to Monday and investors are now counting their losses, as Kuaishou shares closed down 2.83 per cent to HK$82.50, or one-fifth of its peak price six months ago.
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Retail investor Li, who wanted to be identified only by her surname, said she bought Kuaishou shares at HK$391. “I’m now staying away from tech stocks because of the regulatory issues [in China’s internet industry],” said Li, who described her investment in Kuaishou as “a mistake”.
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What is Kuaishou? Understanding China’s video-sharing app
What is Kuaishou? Understanding China’s video-sharing app
Major investment houses, including the likes of Fidelity and Invesco, are also smarting from the rapid decline in Kuaishou’s share price.
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