Kuaishou Shares Tumble After Earnings Release on Subdued Outlook

By Jason Chau

Shares of Chinese internet company Kuaishou Technology tumbled, likely on fears of softer revenue and rising capital spending, even though it posted strong 2025 earnings.

The company, best known for operating the second-largest short video platform in China, on Wednesday reported its fourth-quarter net profit jumped 32%, compared with the same period a year earlier, while its full year profit climbed 21%.

Though both figures only narrowly missed market expectations, its shares dropped 14% in early trade on Thursday, on track for their largest single day loss in nearly a year.

Analysts said they are concerned about the company's outlook for the year.

Citi expects gross merchandise value growth from its core e-commerce business to slow due to new Chinese regulations targeting forced discounting on e-commerce platforms, while advertising growth is also set to moderate due to a muted performance in Brazil, analysts Brian Gong and Alicia Yap said in a note.

Analysts at Nomura now project GMV growth to slow to 7% in 2026 from 15% last year, while net profit is expected to decline 15%-18% this year.

Citi analysts said the hike in capital spending on AI may significantly drag Kuaishou's margin performance, raising some investors' concerns.

The company is set to ramp up this year's capital spending by around 11 billion yuan, equivalent to $1.6 billion, mainly to support its artificial intelligence business and its video-generation model, Kling AI, Chairman Cheng Yixiao said on an earnings call.

"While most of the companies we cover are ramping up AI investments this year, we believe Kuaishou has likely landed in a tougher situation," Nomura's Jialong Shi and Rachel Guo said in a note. "We are concerned that the peak of the competition is yet to be seen."

The company faces intensifying competition from bigger players Bytedance and Tencent in the short video business. Google's Veo 3 and Bytedance's Seedance 2.0 are also eroding Kling AI's advantages in the video generation space.

Write to Jason Chau at jason.chau@wsj.com

(END) Dow Jones Newswires

March 26, 2026 01:09 ET (05:09 GMT)