Chinese video star has further to fall

Kuaishou Technology (1024.HK) is losing fans, and fast. Nearly 12% of the $110 billion viral video company’s market value vanished following disappointing results. And the shares had previously tumbled 44% from a peak achieved shortly after its initial public offering in February. Blame extravagant expectations.

Quarterly sales surged 37%, to roughly $3 billion, from a year earlier. Kuaishou’s net loss, however, nearly doubled to a whopping $9 billion, as a pandemic bonanza waned and the company embarked on a quest for new revenue .

The Kuaishou enterprise, which is up against Douyin owner ByteDance, is now valued at about 5 times expected revenue for the next year. Rival Bilibili (9626.HK) trades at 8 times while its backer Tencent (0700.HK) fetches 7 times, Refinitiv data show. Even after the rout, Kuaishou shares are roughly 75% higher than their market debut price. Dropping back to that level would impute a multiple of 3 times. Given the rising customer acquisition costs, that may be a more appropriate figure. Reuters