Kuaishou's stock price plummeted over 14%, with a total market capitalization now less than HKD 200 billion.

Why Did Kuaishou’s Profit Growth Fail to Stop Its Stock Price from Plummeting?

Kuaishou (01024.HK) with a profit of 20 billion yuan cannot buy a growth story, and its stock price plummeted after the earnings release.

On March 26, in the Hong Kong stock market, Kuaishou, which disclosed its earnings, opened down over 9% and then quickly fell further, closing down 14.04%, with a total market value of less than 200 billion Hong Kong dollars.

On the evening of March 25, Kuaishou Technology released its fourth quarter and full-year earnings for 2025. The financial report showed that in the fourth quarter of 2025, Kuaishou’s total revenue grew 11.8% year-on-year to 39.6 billion yuan, and adjusted net profit reached 5.5 billion yuan, a year-on-year increase of 13.8%. The full-year revenue for 2025 was approximately 142.8 billion yuan, a year-on-year growth of 12.5%; the annual profit was approximately 18.6 billion yuan, a year-on-year increase of 21.4%; and the full-year adjusted net profit was approximately 20.6 billion yuan, a year-on-year increase of 16.5%.

According to the financial report, online marketing services revenue remains the core engine driving Kuaishou’s revenue, accounting for 57% of total revenue, which increased by 12.5% from 72.4 billion yuan in 2024 to 81.5 billion yuan in 2025. Kuaishou stated that this was mainly due to the accelerated penetration and innovative application of AI in various scenarios of online marketing services.

Kuaishou CFO Jin Bing stated that in 2026, Kuaishou expects the group’s overall Capex (capital expenditure) to reach approximately 26 billion yuan, an increase of about 11 billion yuan from 2025. These investments include computing power investments in large models and other foundational large models, as well as conventional server procurement expenditures and data/computing center construction projects.

Regarding this financial report, Huatai Securities believes that Kuaishou’s fourth-quarter data slightly exceeded expectations, but under the background of live content rectification in 2026, the growth rate of commissions and advertising revenue has significantly slowed (small and medium-sized businesses are under pressure with weak resilience), while profits have declined year-on-year due to AI investments (depreciation and salary expenses).

Nomura analysts stated in a research report that Kuaishou may face profitability pressure. Nomura indicated that Kuaishou’s performance outlook for 2026 is weak, with revenue growth around 4% and adjusted net profit declining by 15%-18%, both below market expectations. The firm expects that weak advertising momentum and increased AI capital expenditures will put pressure on profit margins. They stated, “We believe that Kuaishou’s increased AI capital expenditure is the right move, but we are concerned that this is just the beginning of a new investment cycle, which may last until after 2026.” Nomura has downgraded Kuaishou’s rating from Buy to Neutral and lowered its target price from 77 Hong Kong dollars to 57 Hong Kong dollars.

Morgan Stanley published a research report, lowering its earnings per share forecast for Kuaishou from 2026 to 2028 by 17% to 24%, and has reduced its target price from 73 Hong Kong dollars by 25% to 55 Hong Kong dollars, with a rating of “In Line with the Market.” Morgan Stanley stated that increasing investment in AI is common among Chinese technology stocks, but the significant slowdown in total revenue (especially in online marketing) raises concerns about investment returns.