In 2021, investors valued the Xiaohongshu service at $20 billion.
- The Xiaohongshu app, which translates to “Little Red Book,” for sharing photos and videos, garnered $500 million in net profit with a revenue of $3.7 billion in 2023, as reported by the Financial Times, citing four sources familiar with the details.
- For comparison, in 2022, the service incurred $200 million in losses with approximately $2 billion in revenue, according to the newspaper.
- The publication notes that Xiaohongshu is a “rare success story in a sector that has suffered from the departure of foreign investors and declining valuations.” In the latest known investment round in 2021, the company raised $500 million at a valuation of $20 billion, sources said.
- Most of Xiaohongshu’s revenue comes from advertising, and users also use the app for selling products through live streams and short videos.
- Despite the promising financial indicators, one investor highlighted in conversation with FT that the company’s future “remains uncertain” as there is “no clear path” to an IPO. For companies handling large amounts of user data, going public is complicated due to China’s government policies.
- According to the newspaper, Xiaohongshu’s audience reached 312 million monthly active users in 2023 — a 20% increase year over year. Moreover, 70% of users are women, making the app “an increasingly important channel for brands targeting affluent women.” Xiaohongshu did not respond to a request for comment.