Research reports slash target prices—Is Kuaishou really about to be abandoned by institutions?

As of 2:00 p.m. on March 26, Kuaishou-W (01024.HK) shares plunged by over 13%, marking the largest single-day decline in nearly 11 months.

The immediate trigger for this sharp volatility was the financial report disclosed by Kuaishou Technology (hereinafter “Kuaishou”) after market close the previous day. Although the financial data itself met market expectations, signals of slowing marginal growth and institutional investors adjusting their holdings together prompted a concentrated market correction.

Changes in institutional expectations: target prices generally cut sharply

Financial data showed that in the fourth quarter of 2025, Kuaishou’s total revenue increased by 11.8% year-over-year to RMB 39.6 billion, with an adjusted net profit of RMB 5.5 billion, up 16.2% year-over-year. For the full year, total revenue in 2025 rose 12.5% to RMB 142.8 billion, and adjusted net profit reached RMB 20.6 billion, up 16.5%. Judging solely by these figures, Kuaishou’s profitability remains attractive.

However, the market’s intense reaction was driven by the slowdown in growth margins. Kuaishou’s revenue growth in the fourth quarter was 11.8%, below the full-year average of 12.5%; profit growth of 16.2% also lagged behind the full-year 16.5%. More critically, GMV from e-commerce business grew only 12.9% year-over-year to RMB 521.8 billion, a far lower rate than during the company’s previous high-growth phase.

Additionally, Kuaishou Technology ceased disclosing GMV data separately; this move was interpreted by the market as a signal that the “high-growth story is coming to an end.”

User growth reaching a ceiling also became more apparent. The financial report indicated that in the fourth quarter, Kuaishou’s average daily active users (DAU) were 408 million, and average monthly active users (MAU) were 741 million. While the absolute figures remain robust, sequentially DAU declined compared to Q3, fueling concerns that the traffic dividend has been exhausted.

The core logic behind the high valuation assigned to Kuaishou in the past was its rapid user and GMV growth. Currently, profit growth relies more on efficiency improvements such as AI-driven cost reductions and expense cuts. The financial report highlighted that ongoing upgrades to generative recommendation large models and intelligent bidding models contributed to approximately 5% growth in domestic online marketing service revenue. But such efficiency gains are believed to have a physical limit, making it difficult to sustain previous high valuation levels.

Following the release of the financial report, several international investment banks sharply lowered their target prices for Kuaishou-W. According to a research report by Jefferies, its target price was cut from HK$106 to HK$82, a decrease of 22.6%, though it maintained a “Buy” rating. Jefferies noted that different business segments of Kuaishou showed divergence, but that AI-driven solutions could still support strong growth momentum; it also lowered its 2026 live-streaming revenue forecast for Kuaishou-W, adopting more cautious assumptions regarding online marketing traffic support and incentive rebates.

Citi reduced its target price from HK$95 to HK$72, maintaining a “Buy” rating; HSBC lowered its target from HK$89 to HK$65, also maintaining a “Buy” rating; Morgan Stanley cut its target from HK$73 to HK$55, changing the rating from “Buy” to “In line with the market.”

Overall, despite most institutions maintaining “Buy” or “Overweight” ratings, their target prices have generally declined from the HK$80–HK$108 range before the earnings release, reflecting a cooling in market expectations for Kuaishou’s future growth.

Changes in institutional holdings: ETFs remain dominant, active funds or passive exits from top holdings

According to iFinD data, as of the end of Q4 2025, a total of 130 funds held Kuaishou-W shares, with approximately 183 million shares in total. Compared to 183 funds at the end of Q3, the number of funds holding the stock decreased by nearly 30% quarter-over-quarter.

In terms of holding structure, among the 24 funds holding over one million shares of Kuaishou-W, most are ETFs focused on themes like Hong Kong internet and Hang Seng Tech, such as the China Fund Hong Kong Stock Connect Internet ETF, which held 51.98 million shares, and the ICBC Hang Seng Tech 30 ETF, with 23.74 million shares. Both have increased their holdings consecutively. In fact, among the funds holding over one million shares, aside from Hongde Ruize Hybrid 2025 Q4, which maintained its position, most others have continued to increase their holdings.

It is noteworthy that in Q4 2025, Kuaishou-W’s stock price fell 24.41% in a single quarter. While some actively managed funds did not fully liquidate their positions, the decline in market value caused Kuaishou to be passively removed from their top ten holdings list. For example, the E Fund Hong Kong Stock Connect Quality Growth Hybrid held 1.2605 million shares at the end of Q3 2025, with a market value of about RMB 97.36 million, ranking eighth among top holdings; by the end of Q4, it had exited the top ten, while Alibaba, Tencent Holdings, Semiconductor Manufacturing International Corporation, and others remained. Given that the threshold for the top ten holdings in Q4 was raised to about RMB 73.42 million, the fund would only need to slightly reduce its holdings of Kuaishou-W, and amid the decline in its market value, it would exit the top holdings list.

A similar situation occurred with the Quan Guo Xu Yuan three-year holding period hybrid fund. At the end of Q3 2025, it held 13.23 million shares of Kuaishou-W, worth about RMB 1.027 billion, making it the ninth-largest holding; by the end of Q4, Kuaishou-W had exited its top ten, with the threshold rising to about RMB 763 million. Even without reducing holdings, the market value of its Kuaishou-W position at year-end was very close to that of the tenth-largest stock.

Looking at broader active fund holdings, many funds that reduced or fully exited Kuaishou in Q4 are smaller in scale and more concentrated. In terms of fund size, only two—Hua Xia Shanghai-Hong Kong Stock Connect Hang Seng ETF and Bao Ying Innovation-Driven Stock A—manage over RMB 1 billion; the remaining 24 funds have assets under RMB 500 million.