Source: Visual China
Author 丨Lius
Editor 丨 Kang Xiao
Produced by 丨Shenwang Tencent News Xiaoman Studio
On the first day of the double listing of Hong Kong stocks, a dramatic scene was staged, and the stock price fell all the way after the opening of the morning. Hong Kong stocks closed at HK$24.5 per share, down 23.58% from the issue price of HK$32.06 per share.
Zhou Yuan, the founder of Zhihu, wrote in an open letter to all Zhihu users, "Double main listing, build a more stable platform for the company." But in fact, I know that the listing in Hong Kong is not to sell new shares to raise funds, but to sell old shares by old shareholders, which opens a "exit door" for them.
Affected by this, since April 7, it is known that the US stock market has fallen for 9 consecutive trading days, closing down 7.72%, 2.66%, 12.89%, 0.90%, 2.71%, 8.37%, 6.60%, 0.54%, 9.84%, respectively. Based on the closing price of $2.85 on April 7, the stock price fell by 42.11% in 9 trading days; the market value was more than 70% lost. It can be seen that the performance of Hong Kong stocks today has long been a precursor.
For China's largest online Q&A community, once surrounded by an aura, this may be an unprecedented crisis it has ever encountered.
Zhou Yuan sighed, "We are indeed not as strong as we think. Or maybe the secondary market always has a necessary cycle, or maybe the stocks in the past year have not gone very easy. Recalling landing on the New York Stock Exchange in early 2021, Zhou Yuan said that "it was really lucky", but now we know that after the listing of the US stock market, the black swans in the sky flew wildly, the gray rhinoceros on the ground ran wildly, and the external environment took a sharp turn..."
The external environmental impact is on the one hand, on the other hand, Zhihu itself is also trapped in the shackles of high-quality content and commercialization. Balancing the two ends of the scale is much harder than you might think.
According to the financial report, The revenue of Zhihu in 2019, 2020 and 2021 was 670 million yuan, 1.352 billion yuan and 2.959 billion yuan respectively, and the net loss was 1 billion yuan, 517 million yuan and 1.3 billion yuan, respectively. Behind the widening losses is its questionable commercialization path.
At the strategy meeting at the beginning of this year, Zhou Yuan told the team about the "importance of crossing the cycle". But as for where the future holds, Zhihu and its founder, Zhou Yuan, urgently need to find a way to quickly find the one that can work.
Dual listing is a safe haven
For Zhihu, the dual listing on the Hong Kong Stock Exchange and the New York Stock Exchange is "to build a more stable platform." ”
On April 8, Zhihu passed the hearing of the Hong Kong Stock Exchange, and the underwriters were Credit Suisse, JPMorgan Chase, CICC and CMB International. Hong Kong listed 26 million shares at HK$32.06 per share, raising approximately HK$832 million. This is about 20% of the amount raised by it at the time of its LISTING ON THE US stock market (HK$4.08 billion).
It is worth noting that the shares offered in this double listing are all from old shareholders and have no new shares. In other words, the 832 million raised amount is a monetization channel for old shareholders.
"This dual listing method is equivalent to giving the old shareholders a channel to exit, otherwise investors will not be able to withdraw according to the current market performance of Zhihu." Some analysts said.
The so-called dual main listing means that both capital markets are the first listing places. The secondary listing refers to the company issuing the same type of shares in two places, realizing the cross-market circulation of shares through international custodian banks and securities brokers, plus the Hong Kong dollar linked to the US dollar, ignoring taxes, trading hours, friction costs, the spread is basically negligible.
Compared with the two methods, after the double listing, the two market stocks of Hong Kong stocks and US stocks cannot be directly circulated across the market, and the stock price performance is relatively independent.
For Zhihu, this is also the best way to avoid being affected by the US stock price after the second listing. Under the framework of dual listing, even if the performance of the US stock market continues to decline, it will not affect its Hong Kong stock market.
However, in terms of results, the upper limit of the offering price of Zhihu stocks in Hong Kong is HK$51.8, but the final issue price is set at HK$32.06 (about US$4), compared with the US stock price that has fallen from about US$5 to about US$2 this year, which shows that the value judgment of the two markets on Zhihu is basically the same.
The old shareholders fled
Knowing that going to Hong Kong for double listing, a scene of old shareholders cashing out and fleeing has been staged.
Zhihu said that the IPO in Hong Kong intends to issue 26 million shares, of which 2.6 million shares will be offered in Hong Kong and 23.4 million shares will be sold internationally, but "the company will not receive any net proceeds from the global offering, and the shareholders of the shares will receive all the net proceeds of the global offering." "
To put it simply, it is known that going to Hong Kong to list is not through the issuance of new shares, but the issuance of 2600 shares in the hands of early investors. In this way, the amount of funds raised will not enter the pocket of Zhihu, but will realize the early investors to sell shares to new investors to take over the baton.
Among the many investors, except for the shareholding ratio of the major shareholders Tencent and Zhou Yuan, which have not changed, other shareholders have reduced their holdings to varying degrees.
According to the latest data disclosed in the prospectus, after the completion of the global offering, Tencent became the company's largest shareholder with 12.02% and Zhou Yuan, founder, chairman and CEO of Zhihu, ranked second, holding 11.64% of the shares.
Among them, Kai-Fu Lee's innovation works Development Fund, L.P., sold 5,646,000 shares at an issue price of 32.06, cashing out HK$181 million; its wholly-owned Invention Works Holdings Limited sold 1.854 million shares to cash out HK$59 million, totaling HK$240 million. Total shareholding decreased from 9.65% to 7.28%.
Xu Xin, who believes in "long-term holding", sold 12 million shares of Zhihu through CTG Evergreen Investment XX Limited today Capital, cashing out HK$385 million, reducing his shareholding from 4.84% to 1.05%.
SAIF INVESTMENT SAIF IV Mobile Apps (BVI) Limited sold 3.25 million shares to cash out HK$104 million, reducing its shareholding from 6.72% to 5.69%.
Qiming Venture Partners III, L.P., Qiming Venture Partners III Annex Fund, L.P., Qiming Managing Directors Fund III, L.P., sold 2,670,200 shares, 495,600 shares and 84,200 shares respectively, totaling HK$104 million, with a total shareholding ratio of 8.26% Down to 7.24%.
These well-known investors who were optimistic about Zhihu many years ago have used their holdings to cash out at the critical moment of knowing their fate to protect the few remaining investment returns.
Literary Youth and the "Republic"
In the past year, Zhou Yuan and hundreds of investors in the secondary market have exchanged thoughts through the cycle. For everyone's concern about "how to grow healthily" and "how to expand the scale and support yourself", Zhou Yuan also gave his own answer in the open letter of the listing:
First, "community ecology first". It is still the strategy of knowing 2022, such as focusing on the creator experience, content acquisition, good community atmosphere, and commercial growth rate that matches the rhythm of community development.
Second, "social value". Business management is not a "limited game", efficiency is not the ultimate purpose of the Internet, social value is. The value of Zhihu is to help more people get rid of the fear and anxiety, pride and prejudice brought about by the unknown.
Third, "rational optimism." Fear, narrow-mindedness, arrogance and prejudice brought about by the unknown spread and grew with the outbreak of the "black swan". But knowing that it will challenge the opponents of this era, that is, the original intention of "gathering the knowledge, experience and insights in everyone's mind and using them for everyone" remains unchanged, to ask questions, to answer, to act.
To this day, Zhou Yuan still ranks the community ecology first. This is the foundation of knowing the destiny.
For a long time in the past, Zhou Yuan, a science student and media person, was like a literary and artistic youth, with his own insistence on content ecology, while commercialization was relatively slow and restrained.
For example, in the first 5 years of its establishment, Zhihu adopted an invitation system like Quora, and only made a fairly niche content community until 2013, when it was all opened.
The commercial advertising division specializing in commercialization and the knowledge payment division were only established in 2017. At that time, in the Internet industry advocating "only fast and not broken", the pace of knowing was somewhat unimaginable.
Zhou Yuan later said that zhihu at that time was "like a city whose population base has stopped growing, and it has begun to show fatigue." However, it is also based on the strict control of user and content quality in the early days, laying the foundation for the quality of the community later.
Commercialization is fast moving
However, in the years that followed, high-quality community content did not continue in an idealized state. At least in the minds of some users.
Compared with the small arrogance of the early "thank you, just get off the plane", some old users began to complain on the platform that the content was "getting more and more watery", such as repetitive questions, common sense questions that can be directly answered by search engines, as well as those traffic web novels recommended by the platform, advertorial ads, and video recommendations that were not so interested.
All of this can be traced back to 2017, when Zhihu began to commercialize, and in recent years, when it was fully commercialized.
In 2017, Zhihu officially entered the stage of comprehensive commercialization, and gradually formed two models of commercial advertising and knowledge services. Zhou Yuan once said that this year zhihu developed very quickly, whether it is the growth of the entire user scale, or the cooperation end, there are many changes.
For example, you can see native article ads, display ads, native Q&A ads in the information flow, including brand questions, personal answers, Live special scenes, etc., offline with salt Club, salt salon as the support, and will launch a new exposure hard wide product "brand area".
Then at the beginning of 2019, Zhihu internally clarified a general direction, that is, to take the "member" business as one of the important goals of the company's strategic development in 2019, and "salt selected members" is the phased embodiment of this goal. Zhou Yuan believes that members should become the second scene of content consumption.
Zhihu has packaged all the branch members launched in the past, such as book club members and super members, into the "salt selection members", and also added other rights and interests other than paid content. This reveals an important signal that Zhihu must not only provide good content, but also reduce the cost of users to obtain high-quality content through the update of product forms, which can be interpreted as Zhihu's further exploration in the field of commercialization.
In the same year, after completing the F round of financing, Zhou Yuan issued a "military order", saying that "fast is to live, slow is to die, and it must be done." We are born for efficiency, if the company's internal work efficiency can not be guaranteed, wouldn't it be ridiculous and generous; we fight for trust, if the quality of work within the company is not trustworthy, how can it succeed? Subsequently, after a period of market research and internal testing, the Zhihu live broadcast function was also officially launched.
At the beginning of 2021, Zhihu continued to increase its investment in video. "Finance and Economics" reported that at the beginning of the year, the daily video playback volume in the station was more than 20 million, and the target for the end of the year was set at 90 million. The report also said that this year, the revenue target of zhihu's commercialization department is as high as 5 billion yuan, and the 2021 financial report shows that its combined revenue from advertising and commercial content solutions is 2.135 billion yuan.
Commercial engines are constantly being fueled, but little attention is paid to the proper direction and speed of progress.
To this day, despite Zhihu's continuous attempts at commercialization, advertising revenue still contributes the vast majority of revenue. Zhihu's content-centric business model mainly includes online advertising, commercial content solutions, paid memberships and other businesses (mainly including online education and e-commerce).
Correspondingly, in 2021, the revenue of Zhihu's online advertising business was 1.161 billion yuan, accounting for 39.24% of the total revenue, an increase of 37.7% over 2020; the revenue of commercial content solutions was 974 million yuan, accounting for 32.93% of the total revenue, an increase of 617% year-on-year; the revenue of paid membership business was 669 million yuan, accounting for 22.61% of the total revenue, an increase of 108.6%; online education services such as vocational training and professional courses. E-commerce business revenue in 2021 was 156 million yuan, accounting for 5.27% of total revenue, an increase of 196% year-on-year.
Among them, the "commercial content solution" with the largest year-on-year growth rate was proposed in 2020, and the fundamental reason is to find the right creator for enterprises with product promotion needs, and then distribute the created content to users. However, the outside world believes that this model is still a variant of advertising monetization.
In the 11 years since its establishment, Zhihu has been constantly groping on the difficult road of content monetization, trying to find the middle point on the balance of high-quality content and commercialization, but now it seems that it is destined to go a long way.
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