China’s largest question-and-answer platform Zhihu will price 55 million shares to be issued Friday at $9.5 each, aiming to launch a $522.5 million initial public offering (IPO) in the US, according to people familiar with the matter, Sina Finance reported.
The Chinese knowledge-sharing unicorn submitted its prospectus to the US Securities and Exchange Commission on March 5, seeking to add momentum to its monetization efforts, with Credit Suisse, Goldman Sachs and Morgan Stanley acting as underwriters of the deal.
Zhihu, or “do you know?” in classical Chinese, has now amassed 75.7 million average monthly active users and more than 43.1 million cumulative content creators, who together have contributed 315.3 million questions and answers, according to its prospectus. However, the platform currently only has 2.4 million paying members representing just 3.4% of its monthly active users.
The Tencent-backed company holds ambitions to become much more than a text-based content platform. It has embraced popular multimedia functions such as live streaming and other video content, introduced paid content and membership programs, and even offers an online education and e-commerce service.
The firm’s revenue doubled from 2019 to 2020, still only reaching $207.2 million. In 2020, it suffered a net loss of $79.3 million. Zhihu claims it’s “still in an early stage of monetization” with “significant runway for growth across multiple new monetization channels.”
Apart from gearing up for an IPO, Zhihu is also said to have arranged a non-brokered private placement to raise total proceeds of up to $250 million. Alibaba, Tencent and retail giant JD.com will serve as the company’s institutional investors.
Zhihu will make its debut under the symbol “ZH” on the New York Stock Exchange.
Founded in 2010, Zhihu started out as an invite-only online community, restricting access to members that required a user registration code. The company opened its platform to the general public two years later, after which the number of users skyrocketed tenfold to four million in less than one year. In 2016 and 2017, Zhihu Live, a paid virtual event product, attracted a significant degree of public attention, but since then its popularity has declined, Protocol reported.