Produced by Leida Finance | Authored by Ding Yu | Edited by Meng Shuai

On May 11, news emerged that Kuaishou's subsidiary, Kling AI, was planning to 'strike out on its own'.

It is reported that Kuaishou is considering spinning off Kling AI and listing it in 2027. To this end, the company is in negotiations with investors, including Tencent, for financing. Kling AI's valuation is expected to soar to $20 billion (approximately RMB 130 billion).

On May 12, Kuaishou announced that its board of directors is assessing a proposed restructuring plan for the assets and businesses associated with Kling AI, which may involve introducing external financing.

However, Kuaishou clarified that the proposed plan is still in its nascent stages, and the company has not yet finalized any agreements. There is no certainty that the proposed plan will materialize.

It is widely speculated that amid the AI craze sweeping through capital markets, with numerous companies achieving astronomical valuations, Kuaishou's move to spin off Kling AI is aimed at revaluing its worth.

In terms of financial performance, in 2025, Kuaishou's revenue surged by 12.51% year-on-year to RMB 142.776 billion, with net profit attributable to the parent company rising by 21.4% to RMB 18.617 billion. Nevertheless, compared to the triple-digit growth rates witnessed in 2023 and 2024, the growth rate of Kuaishou's net profit attributable to the parent company has decelerated significantly.

During trading on May 12, Kuaishou's stock price initially surged by over 10% to HK$57.4 per share. However, by the close of trading that day, it had retreated to HK$52.6 per share, marking a 1.94% increase from the previous trading day. On May 13, Kuaishou's stock price dipped by 1.9%, with its latest market capitalization standing at HK$224.3 billion.

Kuaishou's 'Prized Asset' Aims to 'Strike Out on Its Own', Valuation Could Reach $20 Billion

Recently, multiple media outlets have 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 fervor for AI concept stocks.

Relevant reports indicate that Kuaishou has engaged in discussions with potential investors, including Tencent, regarding Pre-IPO financing for Kling, with this round of financing valuing Kling at $20 billion. If subsequent valuation negotiations proceed smoothly, Kling may embark on independent operations.

According to National Business Daily, sources close to the deal revealed that Kuaishou is indeed in financing discussions centered around a $20 billion valuation for Kling AI.

Based on Kuaishou's 2025 annual report, in December of the previous year, Kling AI's monthly revenue exceeded $20 million, translating to an annualized revenue run rate (ARR) of $240 million.

Furthermore, according to Sina Technology, Kuaishou disclosed in March this year that based on January's revenue, Kling's annualized revenue had surpassed $300 million. Informed sources revealed that in the first quarter of this year, Kling's revenue reached $75 million, primarily driven by overseas markets such as North America.

According to Kechuang Board Daily, an analyst in the TMT industry pointed out that Kuaishou's push for Kling's spin-off and listing may stem from the need for valuation restructuring.

"Since the beginning of this year, large model companies such as Zhipu AI and MiniMax have witnessed robust stock performance and market capitalizations exceeding HK$200 billion after listing on the Hong Kong Stock Exchange. As a company positioned in both the 'short video + video large model' sectors, Kuaishou's overall valuation is only slightly over HK$200 billion. Coupled with Kling's commercialization progress consistently exceeding expectations, Kuaishou likely believes its AI business is undervalued. A spin-off and listing could achieve a revaluation."

Investment bank Morgan Stanley shares a similar viewpoint: If the financing is ultimately realized, this deal will unlock significant value for Kuaishou, as the market typically assigns higher valuation multiples to pure AI companies.

Morgan Stanley noted in its report that media reports indicate Kling's target valuation is $20 billion, significantly higher than the bank's previous valuation of Kling AI at $6 billion under Kuaishou's umbrella. Considering this transaction, Kuaishou's stock price should be at HK$68.

Additionally, according to LatePost, as of the end of April, Kling AI's ARR had reached $500 million, doubling from before the Spring Festival. If this round of financing is completed, Kling AI will become the highest-valued independent product among video generation large models globally.

At noon on May 12, in response to the numerous rumors circulating externally, Kuaishou promptly disclosed a voluntary announcement.

Kuaishou stated that it had taken note of media reports on May 11 claiming the company intended to secure external financing and pursue a proposed independent listing for the assets and businesses related to Kling AI.

In this regard, Kuaishou provided an update to its shareholders and investors, stating that to further leverage external financial resources, its board of directors is evaluating a proposed restructuring plan for the assets and businesses associated with Kling AI, which may involve introducing external financing.

However, Kuaishou emphasized that as of the announcement date, the proposed plan is still in its preliminary stages, and the company has not yet signed any definitive agreements. There is no guarantee that the proposed plan will proceed.

AI 'Dominates' Kuaishou's Financial Report, Kling's Annual Revenue Surpasses 1 Billion Yuan

According to Tianyancha, 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 DiT-route video large model open to the public and comparable to Sora, it supports 1080P high-definition video generation, with a maximum duration of 2 minutes. It subsequently swiftly introduced image-to-video functionality, completing its core feature layout.

In July of the same year, Kling AI initiated a comprehensive public beta and launched a paid membership service priced at RMB 66 per month, officially commencing its commercialization exploration. By the end of 2024, Kling's cumulative revenue had exceeded RMB 100 million, achieving an initial breakthrough in commercialization.

Entering 2025, Kling AI's strategic position within Kuaishou has been further elevated. Last April, Kuaishou established the Kling AI Business Division, upgrading it to a first-tier department alongside core businesses such as e-commerce and commercialization, directly reporting to Kuaishou's founder and CEO, Cheng Yixiao.

Leida Finance observed that in the 2025 annual report disclosed in late April this year, AI became a frequently mentioned buzzword 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 a steady improvement in overall profitability, with AI capabilities becoming a core engine driving Kuaishou's long-term growth.

The financial report reveals that in 2025, Kuaishou's total revenue grew by 12.51% year-on-year to RMB 142.776 billion, with net profit attributable to the parent company increasing by 21.4% to RMB 18.617 billion.

However, compared to the triple-digit growth rates witnessed in 2023 (146.72%) and 2024 (139.76%), the growth rate of Kuaishou's net profit attributable to the parent company last year slowed down.

Focusing on Kling AI, in the four quarters of last year, it recorded revenues exceeding RMB 150 million, RMB 250 million, RMB 300 million, and RMB 340 million, respectively, with cumulative annual revenue surpassing RMB 1.04 billion, significantly surpassing the RMB 60 million performance target set at the beginning of 2025.

At the same time, AI has also acted as a 'booster' for Kuaishou's other businesses.

From a business structure perspective, Kuaishou's main businesses can be categorized into three segments: 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, respectively, up 12.49%, 5.47%, and 27.61% year-on-year, accounting for 57.1%, 27.4%, and 15.5% of the company's total revenue.

Kuaishou stated that the growth in online marketing service revenue was primarily due to the accelerated penetration and innovative applications of AI in multiple scenarios of online marketing services.

In the fourth quarter alone last year, the company's generative recommendation large model and smart bidding model contributed to a roughly 5% increase in domestic online marketing service revenue.

While AIGC technology reduced the cost of generating online marketing materials, it also unlocked more marketing budgets from clients. In the fourth quarter of last year, the consumption amount of online marketing services generated 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, the Keye-671B model, demonstrating robust video understanding capabilities.

At the same time, the company upgraded its short video and live streaming content understanding system, introducing a new-generation tagging system, TagNex, to achieve more precise content understanding, leading to increases in user engagement and retention.

In 2025, the average daily active users and average monthly active users of the Kuaishou app reached 410 million and 725 million, respectively, up 2.7% and 2.1% year-on-year.

The growth in Kuaishou's other service revenues was primarily driven by the growth of its e-commerce business and Kling AI business.

Kuaishou believes that upgrades in AI-based retrieval and recommendation technologies have driven growth in search order volumes and GMV across various e-commerce fields. Last year, Kuaishou's e-commerce GMV reached RMB 1.6 trillion, up 15% year-on-year.

Capital Expenditures to Reach 26 Billion Yuan, Will Kuaishou Join Forces with Tencent Again?

At the earnings call in late 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 commercialization progress, the company remains highly confident that Kling AI's revenue will more than double year-on-year in 2026.

Additionally, Kuaishou's CFO, Jin Bing, disclosed that in 2026, Kuaishou expects its overall group Capex (capital expenditures) to reach approximately RMB 26 billion, an increase of about RMB 11 billion from 2025.

According to Jin Bing, these investments encompass computational power expenditures for Kling's large model and other foundational large models, as well as regular server procurement expenses for offline data storage and processing, and data/computational power center construction projects.

However, when examining the entire industry, Kuaishou's AI investment scale still falls significantly short of another short video giant, Douyin's parent company, ByteDance, which has directly elevated the AI arms race to a whole new level.

According to a May report by the South China Morning Post, after substantial prior investments, ByteDance has increased its AI capital expenditure plan for 2026 to over RMB 200 billion (approximately $30 billion), representing at least a 25% increase from the RMB 160 billion plan initially discussed at the end of last year.

After ByteDance invested this enormous sum, the effects were immediate. In early 2026, ByteDance's AI video generation application, Seedance 2.0, completely ignited global online enthusiasm with its explosive AI video generation capabilities.

The outside world inevitably compares ByteDance's Seedance 2.0 with Kuaishou's Kling on the same stage.

In response, Cheng Yixiao stated that video generation large models are highly complex, with open-ended input and output formats, high degrees of freedom in technology and product selection, and significant room for innovation.

However, Cheng Yixiao also noted that from a company perspective, video generation technology and products are far from mature, and the collective efforts of many participants can accelerate industry progress and better meet user needs.

At the same time, an undeniable fact is that the vigorous development of AI businesses has placed significant cash flow pressure on internet companies. Even financially robust companies like ByteDance have seen their profitability affected to a certain extent by heavy AI investments.

In March this year, OpenAI, the overseas AI giant that first launched the AI video generation application Sora, even made a surprising decision to strategically shut down Sora.

Looking at Kuaishou, its own 'blood-making' capabilities are also under pressure. In 2025, the net cash generated from the company's operating activities was RMB 26.716 billion, a year-on-year decrease of 10.31%.

As of the end of last year, Kuaishou's cash and cash equivalents on hand were RMB 11.18 billion, a year-on-year decrease of 11.95%.

Against this backdrop, Kuaishou's plan to significantly increase capital expenditures to RMB 26 billion this year will undoubtedly further intensify its cash flow pressure.

It is worth mentioning that according to Kuaishou's 2025 annual report, Tencent holds approximately 679 million Class B shares in Kuaishou, accounting for 18.76% of the Class B shares and 15.71% of the total share capital, making it Kuaishou's largest single institutional shareholder.

Some believe that if the market rumors are true, Kuaishou seeking financing from its major shareholder, Tencent, could be a 'win-win situation'.

For Kuaishou, this is crucial ammunition to quench its thirst in the AI arms race; for Tencent, although its own AI business has its 'prized asset,' Yuanbao, the visibility of its AI video model, HunyuanVideo, pales in comparison to ByteDance's Seedance 2.0 and Alibaba's HappyHorse. At this juncture, entering the Kling AI arena may represent a diversified move in Tencent's AI strategy.

Will Kuaishou successfully proceed with Kling AI's spin-off and listing in the future? Leida Finance will continue to monitor the situation.