Donews reported on December 22 that people familiar with the matter said that the social platform Xiaohongshu is expected to record a net profit of $500 million this year, far exceeding the company's estimated profit of less than $50 million at the beginning of the year, indicating that the company's e-commerce business is making a return.
According to Phoenix.com, this strong performance has increased Xiaohongshu's hopes of launching a new round of financing or eventually an initial public offering (IPO). Xiaohongshu has garnered the backing of some heavyweight investors, including Alibaba Group, Tencent Holdings, Temasek Holdings, and GGV Capital.
The company's last funding round was in 2021, when it raised $500 million at a $20 billion valuation, according to people familiar with the matter. However, in last year's private market shares** deal, Xiaohongshu's valuation is said to have fallen to between $10 billion and $16 billion.
Like many privately held companies, Xiaohongshu is not obligated to disclose its financial status and is therefore not subject to independent audits. However, many startups share their results with backers and potential investors.
In order to boost e-commerce sales, Xiaohongshu uses its rich content to entice consumers to shop on the platform. As users scroll through and browse, they can purchase tagged products with just a few clicks.
Xiaohongshu is also focused on getting more ad revenue from brands, after the company announced plans to close its own stores in September.
As of press time, Xiaohongshu has not commented on this.