China's Instagram Rival Xiaohongshu Boosts Annual Profit to $1 Billion Ahead of Potential IPO

Xiaohongshu Technology Co., the company behind the popular Instagram-like app Xiaohongshu, expects to double its profit in 2024, surpassing $1 billion. This could pave the way for a highly anticipated initial public offering (IPO).

According to sources familiar with the company’s finances, Xiaohongshu's net revenue is expected to reach this significant milestone this year, signaling a strategic shift towards profitability rather than just user growth. The company, which was valued at $20 billion during its last funding round in 2021, has experienced a slowdown in user growth since the peak of the pandemic.

Nevertheless, it continues to be a key player in the competitive e-commerce landscape, challenging giants like Alibaba Group Holding Ltd. (NYSE:BABA) and JD.com Inc. (NASDAQ:JD). The app's evolution from a platform for sharing personal travel and food photos to one focused on reviews and live shopping has contributed to its success.

Commonly referred to as "Little Red Book," Xiaohongshu was founded in 2013 by Charlwin Mao Wenchao and Miranda Qu Fang. Initially serving as a shopping guide for Chinese tourists, it has since transformed into a lifestyle app with approximately 300 million monthly active users. The platform leverages influencers to drive product sales and allows users to purchase products directly through tagged videos and photos.