China's Instagram-rival Xiaohongshu hits $1 billion in annual profit ahead of potential IPO

Xiaohongshu Technology Co., the company behind the popular Instagram-style app Xiaohongshu, is projecting a doubling of its profits to surpass $1 billion in 2024, which could set the stage for a highly anticipated initial public offering (IPO).

According to sources familiar with the company's financials, Xiaohongshu's net income is expected to reach this significant milestone this year, signaling a strategic shift toward profitability over user growth.

The company, which was valued at $20 billion during its last funding round in 2021, has seen a slowdown in user growth since the peak of the pandemic.

However, it remains a key player in the competitive e-commerce landscape, challenging giants such as Alibaba (NYSE:BABA ) Group Holding Ltd. (NYSE:BABA) and JD.com Inc. (NASDAQ:JD ). The app's shift from a personal travel and dining photo-sharing platform to a hub for reviews and live shopping has contributed to its success.

Xiaohongshu, also known as "little red book," was founded in 2013 by Charlwin Mao Wenchao and Miranda Qu Fang. It initially served as a shopping guide for Chinese tourists but has since evolved to become a lifestyle app with around 300 million monthly active users.

The platform leverages influencers to drive product sales, allowing users to purchase items directly through tagged videos and photos.

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Source: Investing.com