The Twilight of the Iron Economy — Can Keling Hold Up Kuaishou (快手)?

Market verdict: strong numbers, harsher mood

Kuaishou (快手) posted a solid 2025 result: revenue rose 12.5% to 1,428 亿元 RMB and adjusted net profit grew 16.5% to 206 亿元 RMB, with Q4 revenues of 395.7 亿元 and adjusted profit of 54.6 亿元 — all beating expectations. Yet Hong Kong investors reacted brutally: the stock plunged more than 14% the next day, erasing hundreds of billions of HKD in market value and pushing its market cap below HK$200 billion from a peak of HK$1.738 trillion. Why the disconnect between fundamentals and market sentiment? Because the pillars that once justified a high valuation look shakier than the headline numbers suggest.

Growth pillars are crumbling

Kuaishou’s three historic engines — user expansion, livestream tipping culture, and e‑commerce — are all losing momentum. Daily active users were roughly 4.1亿 (410 million) in 2025, up only ~2.8% year‑on‑year; monthly actives were 7.25亿 (725 million), up ~2.1%. Live streaming, the “old‑iron” tipping economy, turned negative in Q4 and grew only 5.5% for the year. E‑commerce GMV reached 1.6 万亿 RMB but growth slowed to 15% in 2025 and just 12.9% in Q4. Management’s decision to stop separately disclosing GMV from 2026 has been widely read as tacit acknowledgment that double‑digit e‑commerce growth is over. Advertising remains the only consistent grower but that too depends heavily on AI‑driven efficiency gains rather than share grabs — gains that have an obvious ceiling and are sensitive to macro weakness.

Keling: savior or costly bet?

Enter Keling (可灵), Kuaishou’s AI division elevated to a top‑level business unit and rolled out with urgency: O1, 2.6 and 3.0 model series, a reported global user base of over 6,000 万 (60 million) and annualised recurring revenue it has been reported reached about $240–300 million. Keling posted roughly 10.4 亿元 RMB in revenue across 2025 quarters and management has set an ambitious target of 100%+ growth in 2026. But Kuaishou is also dramatically accelerating spend — capital expenditure guidance jumps from 150 亿元 in 2025 to about 260 亿元 in 2026, most of it earmarked for model training and inference compute. To put that in perspective: 260 亿元 exceeds 2025’s entire adjusted net profit (206 亿元). Investors worry about the mismatch between near‑term cash generation and front‑loaded AI capex.

The wider context: tougher markets, harder chips

This is not just a company story. Global investor appetite for long‑dated AI narratives has cooled since 2023; markets now scrutinise cash flow and near‑term ROI. It has been reported that Chinese cloud and AI ramps must also navigate tighter access to advanced chips under U.S. export controls, complicating sourcing and cost trajectories for large‑scale training. For Kuaishou — competing with Douyin (抖音), Taobao (淘宝) and Pinduoduo (拼多多) for commerce and attention — Keling offers a rare path to differentiation because it can be embedded across advertising, content and commerce. But can an internal AI stack and ambitious productisation scale fast enough to replace fading organic growth without burning through shareholder patience? That is the high‑stakes question investors just answered with their feet.