(Bloomberg) — Xiaohongshu Technology Co. is on track to triple its profit to $3 billion this year, making progress with commercialization on the way to a potential public listing.
The social media firm recently updated investors on its latest projections for the full year, according to people briefed on the numbers. In the field of visual-based social platforms, Xiaohongshu’s profit forecast is roughly 50% higher than Pinterest Inc.’s earnings in 2024 and well ahead of Snap Inc., which has yet to complete a profitable year.
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Built around its eponymous app that’s also known as RedNote outside China, Xiaohongshu has 300 million monthly active users and a loyal following among users who treat it as their daily source of news and diversions. The Shanghai-based startup saw its valuation surge to $31 billion in recent transactions, Bloomberg News reported Wednesday.
Xiaohongshu made a splash in the US at the start of the year as an alternative to TikTok at a time when the ByteDance Ltd. app was under threat of being banned from the country. It is widely known as China’s best analog to Instagram, and the company has worked to expand along similar lines. Apart from ad sales, the Xiaohongshu app is also beefing up its e-commerce offerings via tie-ups with Alibaba Group Holding Ltd. and JD.com Inc.
Xiaohongshu representatives did not respond to an emailed request for comment.
Started in 2013 by Charlwin Mao Wenchao and Miranda Qu Fang as a shopping guide for Chinese tourists, Xiaohongshu has since evolved to become the go-to platform for travel reviews and lifestyle tips for a new generation of Chinese smartphone users. That came at the expense of older internet repositories, especially search leader Baidu Inc.
Even with its stellar user growth, investors had expressed some misgivings about Xiaohongshu’s profitability. But over the past few years, the app unlocked new features to allow influencers to peddle goods via livestreams or short videos, in a similar vein to TikTok. The company doubled profits to over $1 billion in 2024, Bloomberg News has reported.
Like many closely held firms, Xiaohongshu isn’t obligated to disclose its finances, which in turn aren’t subject to independent audit. But many startups share their results with backers and potential investors.