Chinese tech giant Tencent is planning to invest between $1 billion and $1.5 billion in short-video application Kuaishou, known outside of China as Kwai, which has a current valuation of around $25 billion.
According to a recent report from Sensor Tower, Kuaishou, literally meaning “fast hand”, generated revenues of $78 million in the second quarter, up 57% from a year earlier. Kuaishou currently has 360 million MAUs and is said to be eyeing an IPO in the near future. The app is known for its viral short video content, providing entertainment to users all over China, as 99% of their revenue was generated in its domestic market.
Tencent first invested in Kuaishou back in March of 2017 when they put $350 million into the company as the short video craze in China was in full flow. While no agreement has been signed yet, the cooperation has reached advanced stages of negotiation. The collaboration between the two companies will allow Kuaishou users to seamlessly share the content they create onto their WeChat accounts, fortifying the stickiness between the two companies.
This move will directly fight back against Tencent rival ByteDance who own’s China’s most popular short video app Douyin, the Chinese version of TikTok. Douyin has 501 million MAUs within China, and so Tencent’s investment support for Kuaishou represents a strategic counter to ByteDance’s emergence in this space.