Kuaishou Technology, operator of China’s second largest short video-sharing platform, reported worse-than-expected losses of 7.04 billion yuan (US$1.1 billion) in the second quarter as Beijing continues its regulatory crackdown on the tech sector.
The earnings results come at a time when the company’s share price has fallen to one-fifth of its peak in February amid a broader crash of Chinese tech stocks triggered by the tighter regulatory environment.
The company reported a net loss of 7.04 billion yuan in the second quarter, missing analysts’ consensus estimates compiled by Bloomberg, which was for a net loss of 6.25 billion yuan. The latest second quarter number compares with a huge 37.6 billion yuan net loss for the same period in 2020.
Kuaishou’s shares recovered somewhat over the past week, with a more than 10 per cent gain since Friday, although the stock closed down 3.55 per cent to HK$77.5 on Wednesday, after losing more than a third of its value over the past month.
The Beijing-based company reported revenue of 19.1 billion yuan (US$29.5 billion) last quarter, representing a 48.8 per cent year-on-year increase, beating the 18.7 billion yuan market estimate.
Gross profit increased by 89 per cent to 8.4 billion yuan from 4.4 billion yuan for the same period last year.
The short video platform reported 293 million average daily active users on its main app, up 11.9 per cent compared with 262 million a year ago.
Earlier this month Kuaishou shut down its overseas app Zynn after it failed to challenge the dominance of TikTok.
China’s tech sector could see regulatory pressure build further after the country’s Ministry of Commerce released draft regulations for the live-streaming industry, declaring that anyone under the age of 16 will no longer be allowed to live-stream, and that live-streamers should speak Mandarin during their sessions.
China had 818 million short video users as of the end of June 2020, according to a report released in October by the China Netcasting Services Association. Kuaishou faces fierce competition from ByteDance, the owner of TikTok and its Chinese sister platform Douyin, with the latter being a potential initial public offering candidate, reporting 600 million daily active users as of August 2020.