Col Group Co.,Ltd. has officially submitted its application for an initial public offering in Hong Kong, aiming to alleviate long-term financial pressures through a secondary listing. The intended use of raised funds includes upgrading AI technology, building an overseas short drama ecosystem, repaying borrowings, and supplementing working capital.
Notably, as a leading domestic digital publishing and online literature IP company, Col Group's core operations have faced persistent challenges. Over the seven-year period from 2018 to 2024, the company reported losses in its non-GAAP net profit for six of those years. Furthermore, Col Group failed to return this metric to profitability in the first three quarters of 2025.
This situation stems from the company's history of frequently chasing market trends since its listing. From mobile games to the metaverse and now short dramas, Col Group has struggled to establish a sustainable and profitable business model. The current Hong Kong IPO represents a major bet on the overseas expansion of short dramas, raising questions about whether this strategy can finally lead to a financial turnaround.
The company's pursuit of trends has seen mixed results. Following its 2015 listing, Col Group invested heavily in the then-booming mobile game sector. In 2018, it fully acquired Shanghai Morn Technology Co., Ltd. However, the latter failed to meet its performance commitments, leading Col Group to record a significant impairment loss of 1.254 billion yuan on the resulting goodwill. This contributed to a massive net loss of 1.508 billion yuan for Col Group in 2018. The company eventually sold its stake in Shanghai Morn Technology in 2020 for a fraction of the original acquisition price.
Subsequently, Col Group shifted its focus to the metaverse in 2021, aligning with the broader industry trend. It announced support for a university research lab and established internal departments dedicated to the concept. However, these investments did not yield profitable returns, and the company reported a loss of 362 million yuan in 2022. By 2024, the term "metaverse" was no longer mentioned in the company's annual report.
Col Group is now pinning its hopes on "short drama overseas expansion" as its core growth engine. According to its Hong Kong IPO prospectus, the company was one of China's first producers and distributors of short dramas as early as 2021. By 2022, it was among the few domestic companies generating over 100 million yuan in annual revenue from this format. Its key overseas platform, FlareFlow, has reportedly achieved over 33 million registered users and 5,200 short drama episodes, even topping daily download charts for free entertainment apps in the US. The company also holds a stake in ReelShort, a leading platform for overseas short dramas.
Despite these promising user metrics, the strategy requires substantial marketing expenditure. In the first three quarters of 2025, Col Group's sales and marketing expenses soared to 660 million yuan, a 94% year-on-year increase, accounting for 65.3% of its revenue. In contrast, research and development investment during the same period was only 53 million yuan. The company acknowledged in its prospectus that the overseas short drama business is a capital-intensive model focused on "spending to gain scale."
This high-spending approach has intensified financial pressures. As of the end of the third quarter in 2025, Col Group held 294 million yuan in cash and cash equivalents, while its short-term borrowings stood at 302 million yuan, with operating cash flow remaining negative. A previous plan to raise 1.784 billion yuan domestically to improve liquidity was terminated in August 2025.
Amidst its IPO preparations, four of Col Group's key executives announced plans to reduce their shareholdings in February 2026, citing personal financial needs. This move has sparked discussion about their confidence in the company's long-term prospects.
From setbacks in mobile games to the fading metaverse trend, Col Group's journey has been marked by investments in trending sectors. The Hong Kong IPO is both a practical move to ease financial strain and a critical test for the company to demonstrate the viability of its current business model to global investors. The central question remains whether Col Group can successfully leverage its extensive IP library into lasting competitiveness, moving beyond a cycle of high spending without sustainable profitability.
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