TikTok Rival Kuaishou's Stock Tumbles After Tencent Cuts Stake

By Jason Chau

Shares of Chinese short video-app operator Kuaishou Technology slumped in Hong Kong after major backer Tencent slashed its stake in the company, denting investor sentiment.

Tencent sold more than 270 million Kuaishou Class B shares, representing about 40% of its stake, to independent third parties through an off-market block trade, the Chinese TikTok rival said in an exchange filing Monday. The disposal reduces the WeChat operator's shareholding in Kuaishou to 9.37% from about 15.68%, with the company ceasing to be a substantial shareholder as a result.

The move by China's most valuable company comes as Kuaishou plans to restructure its artificial-intelligence video unit, Kling. That could involve spinning Kling off and listing it in Hong Kong, The Wall Street Journal reported earlier. Kling was valued at $18 billion in its latest funding round, with Tencent participating as an investor.

Kuaishou's shares dropped 12% in Tuesday afternoon trading, putting the stock on track for its biggest daily percentage loss since late March.

The decline came even as China's second-largest short-video platform said that Tencent's share sale is unlikely to have an adverse effect on its operations. It added that Tencent has indicated it remains confident in Kuaishou's long-term business prospects and will continue to maintain a mutually beneficial business relationship.

Analysts viewed the disposal as a surprise given Kuaishou's undemanding valuation and its exposure to the AI boom.

"We think the disposal could hurt sentiment on Kuaishou and raise concerns about whether Tencent would further sell stakes in Kuaishou or other investees," Citi analysts said.

Citi also pointed to reports from Sina Tech that Tencent is selling shares at an up to 6% discount to Kuaishou's last closing price of 46.00 Hong Kong dollars, equivalent to $5.86.

Tencent's decision to raise its investment in Kling while trimming its stake in the broader Kuaishou suggests the Chinese tech giant is rebalancing its older portfolio toward newer AI-related investments to strengthen its AI exposure, Citi said.

Kuaishou has been aggressively expanding beyond its core short-video and e-commerce businesses into AI through Kling, which it is seeking to establish as the leading AI video-generation model globally.

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

(END) Dow Jones Newswires

July 07, 2026 03:05 ET (07:05 GMT)