On May 11th, news emerged that Kuaishou's AI video model, Kling AI, is planning to "fly solo." Reports indicate that Kuaishou may spin off Kling AI for a separate listing by 2027. The company is reportedly in discussions with investors, including Tencent, for funding, which could value Kling AI at $20 billion (approximately RMB 130 billion). On May 12th, Kuaishou issued an announcement stating that its board of directors is evaluating a proposed plan to restructure the assets and business related to Kling AI, which may involve introducing external financing. However, Kuaishou clarified that the proposed plan is still in its preliminary stages, and the company has not entered into any definitive agreements. There is no guarantee that the proposed plan will proceed. The market widely believes that as AI sweeps through capital markets and several companies have achieved super-high valuations, Kuaishou's move to spin off Kling AI may be aimed at achieving a value reassessment. Financially, in 2025, Kuaishou's revenue increased by 12.51% year-over-year to RMB 142.776 billion, while net profit attributable to shareholders grew by 21.4% to RMB 18.617 billion. However, compared to triple-digit growth rates in 2023 and 2024, the growth rate of Kuaishou's net profit has slowed significantly. On May 12th, Kuaishou's stock price surged over 10% intraday to HKD 57.4 per share. By the close, it had retreated to HKD 52.6 per share, up 1.94% from the previous trading day. On May 13th, Kuaishou's stock price fell 1.9%, with its latest market capitalization at HKD 224.3 billion.
Kuaishou's "Offspring" Kling AI Seeks Independence with Potential $20 Billion Valuation Recently, multiple media sources reported that Kuaishou plans to spin off its Kling AI video business and aims for an IPO next year, seeking to capitalize on the market's investment frenzy around AI concept stocks. Reports suggest Kuaishou has been in talks with potential investors, including Tencent, for a Pre-IPO funding round for Kling, with a valuation target of $20 billion. If subsequent valuation negotiations proceed smoothly, Kling may begin operating independently. According to information from sources close to the matter, Kuaishou is indeed conducting financing communications based on a $20 billion valuation for Kling AI. Kuaishou's 2025 annual report shows that in December last year, Kling AI's monthly revenue exceeded $20 million, implying an annualized revenue run rate (ARR) of $240 million. Furthermore, in March of this year, Kuaishou disclosed that based on January revenue, Kling's annualized revenue had surpassed $300 million. Informed sources revealed that Kling's revenue for the first quarter of this year reached $75 million, primarily from overseas markets such as North America. Analysis from a TMT industry analyst suggests that the core motivation for Kuaishou to push for Kling's spin-off and listing likely stems from a need for valuation reassessment. "Since the beginning of this year, large model companies like Zhipu AI and MiniMax have performed strongly on the Hong Kong stock market after listing, with market capitalizations exceeding HKD 200 billion each. As a company operating in both the 'short video + video large model' sectors, Kuaishou's overall valuation is only slightly over HKD 200 billion. Coupled with Kling's consistently exceeding commercial progress, Kuaishou likely believes its AI business is undervalued, and a spin-off listing could achieve a revaluation." Investment bank Morgan Stanley shares a similar view: if the financing is ultimately realized, this transaction would release significant value for Kuaishou, as the market typically assigns higher valuation multiples to pure-play AI companies. Morgan Stanley noted in a report that media reports suggesting a $20 billion target valuation for Kling are significantly higher than the bank's previous valuation of Kling AI at $6 billion under its Kuaishou valuation. Considering this transaction, Kuaishou's stock price should be around HKD 68. Separate reports indicate that as of the end of April, Kling AI's ARR had reached $500 million, doubling from before the Lunar New Year. If this funding round is completed, Kling AI would become the world's highest-valued independent video generation large model product. At noon on May 12th, in response to widespread market rumors, Kuaishou issued an urgent voluntary announcement. Kuaishou stated that the company noted media reports on May 11th regarding its intention to seek external financing for Kling AI's related assets and business and the proposed independent listing. In response, Kuaishou provided an update to shareholders and investors: to further utilize external financial resources, the company's board of directors is evaluating a proposed plan to restructure the assets and business related to Kling AI, which may involve introducing external financing. However, Kuaishou emphasized that as of the announcement date, the aforementioned proposed plan is still in its preliminary stages, and the company has not entered into any definitive agreements. There is no guarantee that the proposed plan will proceed.
AI Dominates Kuaishou's Financial Report; Kling's Annual Revenue Exceeds RMB 1 Billion Public information shows that Kling AI is a video generation large model independently developed by Kuaishou's AI team. In June 2024, Kling 1.0 was officially launched. As the world's first publicly available, Sora-comparable DiT-route video large model, it supports 1080P high-definition video generation with content up to 2 minutes long. It quickly launched image-to-video functionality, completing its core feature set. In July of the same year, Kling AI initiated a full public beta and launched a paid membership service priced at RMB 66 per month, officially beginning its commercial exploration. By the end of 2024, Kling's cumulative revenue had exceeded RMB 100 million, achieving initial commercial breakthrough. Entering 2025, Kling AI's strategic position within Kuaishou was further elevated. In April last year, Kuaishou established the Kling AI Business Unit, upgrading it to a company-level department on par with core businesses like e-commerce and commercialization, reporting directly to Kuaishou's founder and CEO, Cheng Yixiao. Analysis notes that in the 2025 annual report disclosed in late April, AI became a frequently mentioned high-frequency term for Kuaishou. Kuaishou stated that last year, the company deepened its AI strategy across all major business scenarios. While increasing AI investment, the company still achieved steady improvement in overall profitability. AI capability has become the core engine driving Kuaishou's long-term growth. The financial report shows that in 2025, Kuaishou's total revenue increased by 12.51% year-over-year to RMB 142.776 billion, while net profit attributable to shareholders grew by 21.4% to RMB 18.617 billion. However, compared to triple-digit growth rates in 2023 (146.72%) and 2024 (139.76%), the growth rate of Kuaishou's net profit slowed last year. Focusing solely on Kling AI, in the four quarters of last year, it recorded revenues of over RMB 150 million, over RMB 250 million, over RMB 300 million, and RMB 340 million respectively. Its cumulative annual revenue exceeded RMB 1.04 billion, significantly surpassing the $60 million performance target set at the beginning of 2025. Simultaneously, AI has also acted as a "catalyst" for Kuaishou's other businesses. From a business structure perspective, Kuaishou's main operations can be divided into three categories: online marketing services, live streaming, and other services. Last year, these three segments contributed revenues of RMB 81.462 billion, RMB 39.087 billion, and RMB 22.227 billion to Kuaishou, representing year-over-year growth of 12.49%, 5.47%, and 27.61%, and accounting for 57.1%, 27.4%, and 15.5% of the company's total revenue, respectively. Kuaishou stated that the growth in online marketing service revenue was primarily due to the accelerated penetration and innovative application of AI in multiple scenarios of online marketing services. Specifically, in the fourth quarter alone, the company's generative recommendation large model and intelligent bidding model contributed to an approximate 5% increase in domestic online marketing service revenue. Meanwhile, AIGC technology, while reducing the cost of generating online marketing materials, also leveraged more marketing client budgets. In the fourth quarter, the consumption amount of online marketing services driven by AIGC marketing materials reached RMB 4 billion. In terms of content ecosystem empowerment, Kuaishou independently developed and open-sourced the multimodal large language model Keye-671B, demonstrating strong video understanding capabilities. Concurrently, the company upgraded its short video and live streaming content understanding system, launching the new-generation tagging system TagNex, achieving more precise content understanding and leading to improvements in user time spent and retention rates. In 2025, the average daily active users and average monthly active users of the Kuaishou App reached 410 million and 725 million, respectively, representing year-over-year growth of 2.7% and 2.1%. The growth in Kuaishou's other service revenue was mainly attributable to the growth of its e-commerce business and Kling AI business. Kuaishou believes that AI-based search and recommendation technology upgrades have driven the growth in search order volume and GMV across various e-commerce domains. Last year, Kuaishou's e-commerce GMV reached RMB 1.6 trillion, a 15% year-over-year increase.
Capital Expenditure to Reach RMB 26 Billion; Will It Partner with Tencent Again? During the earnings call at the end of March, Kuaishou's founder and CEO Cheng Yixiao revealed that as of January this year, Kling AI's annualized revenue run rate had exceeded $300 million. Cheng Yixiao stated that based on the current growth momentum and commercial progress, the company maintains strong confidence that Kling AI can achieve revenue growth of more than double year-over-year in 2026. Additionally, Kuaishou's CFO Jin Bing disclosed that in 2026, Kuaishou expects the group's overall Capex (capital expenditure) to reach approximately RMB 26 billion, an increase of about RMB 11 billion compared to 2025. According to Jin Bing, these investments include both computing power for the Kling large model and other foundational large models, as well as regular server procurement expenses for offline data storage and processing, and data/computing center construction project investments. However, looking across the industry, Kuaishou's scale of AI investment still lags far behind that of ByteDance, the parent company of its rival short video platform Douyin, which has directly elevated the AI arms race to a new level. According to reports from May, after previously investing substantial funds, ByteDance has raised its 2026 AI capital expenditure plan to over RMB 200 billion (approximately $30 billion), an increase of at least 25% from the RMB 160 billion plan initially discussed at the end of last year. After ByteDance's massive capital injection, the effects were immediate. In early 2026, ByteDance's AI video generation application Seedance 2.0, with its explosive AI video generation capabilities, completely ignited online popularity both domestically and internationally. The market inevitably compares ByteDance's Seedance 2.0 with Kuaishou's Kling on the same competitive stage. In this regard, Cheng Yixiao stated that video generation large models are highly complex, with open-ended input and output forms, offering considerable freedom in technology and product selection, and significant room for innovation. However, Cheng Yixiao also noted that at the company level, it is still believed that video generation is far from mature in terms of both technology and product. Having multiple participants can accelerate industry progress and better meet user needs. At the same time, an undeniable fact is that vigorously developing AI business places significant cash flow pressure on internet companies. Even for a financially robust company like ByteDance, its profitability has been somewhat affected by massive AI investments. In March of this year, OpenAI, the overseas AI giant that first launched the AI video generation application Sora, even made a surprising decision—strategically shutting down Sora. For Kuaishou, its own "blood-making" ability is also under pressure. In 2025, the company's net cash generated from operating activities was RMB 26.716 billion, a decrease of 10.31% year-over-year. By the end of last year, the cash and cash equivalents on Kuaishou's books were RMB 11.18 billion, a decrease of 11.95% year-over-year. Against this backdrop, Kuaishou's plan to significantly increase capital expenditure to RMB 26 billion this year will undoubtedly further intensify its own cash flow pressure. It is worth noting that the 2025 annual report shows that Tencent holds approximately 679 million Kuaishou Class B shares, representing 18.76% of Class B shares and 15.71% of total shares, making it Kuaishou's single largest institutional shareholder. Some viewpoints suggest that if market rumors are true, Kuaishou seeking financing from its major shareholder Tencent could be a mutually beneficial move. For Kuaishou, it is a crucial supply for the AI arms race. For Tencent, although it has its own AI business with "offspring" like Yuanbao, the prominence of its AI video model HunyuanVideo is far less than that of ByteDance's Seedance 2.0 and Alibaba's HappyHorse. Investing in Kling AI at this time might be precisely a diversified move by Tencent on the AI chessboard. In the future, will Kuaishou successfully advance the spin-off and listing of Kling AI? The market will continue to monitor developments.
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