Chinese social media Xiaohongshu moves closer to IPO as profits surge in 2024, sources say

With popularity booming in recent years and recent profitability, the company has selected underwriters for a planned public listing

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With profits rising in 2024, Xiaohongshu is moving closer to an IPO in Hong Kong. Photo: SOPA Images/LightRocket via Getty Images

Published: 7:35pm, 13 Dec 2024Updated: 12:08pm, 15 Dec 2024

Social media platform Xiaohongshu, known as China’s Instagram, has the wind at its back in its pursuit of an initial public offering in Hong Kong, as its commercialisation efforts pay off, according to sources briefed on the matter.

The Shanghai-based company, which is influential among young Chinese women with its user-generated lifestyle content, has selected underwriters, including China International Capital Corporation, for the planned listing, according to several people familiar with the matter.

The company expects profits to double this year over 2023, exceeding US$1 billion, Bloomberg reported on Thursday, presenting favourable conditions for floating shares on the Hong Kong bourse.

One source, who declined to be named because the matter is private, told the Post that Xiaohongshu’s profits are mainly driven by advertising revenue, but its e-commerce segment still struggles to turn a profit amid sales growth.

Xiaohongshu did not immediately respond to a request for comment on Friday.

The platform, whose name means “little red book”, has more than 300 million monthly active users and a list of big-name investors, including Alibaba Group Holding, Tencent Holdings, Temasek Holdings, GSR Ventures, ZhenFund, HongShan, and DST Global. Alibaba owns the South China Morning Post.

In July, DST Global invested in Xiaohongshu through a share transfer from early investors, valuing the company at US$17 billion.