Kuaishou Technology Earnings: Ad Revenue and User Growth Decelerating, but E-Commerce Upside Remains

We maintain our fair value estimate for Kuaishou at HKD 70 per share after it reported third-quarter 2024 revenue of CNY 31.1 billion, which was relatively in line with our estimate. Online marketing revenue grew 20% year on year as daily active users on the platform grew to 408 million, a 5% year-on-year increase. The livestream business remains a drag as its revenue declined 4% year on year and we believe its long-term business outlook remains challenged given the maturity and saturation of the industry. Positively, e-commerce revenue grew 18% year on year. The firm also saw a 280-basis-point decline in recurring operating margin as it is spending more on user acquisition, artificial intelligence, and content costs to compete, but we believe the firm should see margin expansion from stable advertising and e-commerce growth.