Kling is diligently preparing for an Initial Public Offering (IPO) in Hong Kong, with aspirations to go public as soon as 2027 and raise a minimum of $1 billion. Its revenue growth rate significantly outpaces that of the entire Kuaishou Group, and it has successfully integrated into various overseas professional creative tool ecosystems. Following Kling’s spin-off and listing, investors optimistic about the AI video sector will have the opportunity to directly hold Kling shares. Meanwhile, Kuaishou will need to convince investors that holding shares in the parent company—which encompasses businesses such as advertising, e-commerce, and live streaming—also carries value. At present, Kuaishou’s core revenue still predominantly stems from its traditional platform businesses. The value contributed by the e-commerce business must be assessed based on a combination of merchant commissions and advertising expenditures. Management is strengthening the e-commerce foundation and fueling platform revenue growth through initiatives such as supporting brand and industrial belt merchants, optimizing merchant traffic allocation tools, and introducing AI management tools.

In terms of equity allocation, Kling has adopted a distinctive approach. Cheng Yixiao, who oversees the operations of both Kuaishou and Kling, directly acquires a 1% restricted stake in Kling, in addition to his indirect holdings through Kuaishou. Su Hua is not included in this round of Kling’s individual incentive list and only indirectly benefits from Kling’s growth through Kuaishou. Kling has also established an independent equity and governance structure. Meanwhile, Kuaishou has pledged not to separately control other enterprises primarily engaged in video generation models.

Drawing on past precedents, such as Kingsoft Software’s spin-off of Kingsoft Office and LG Chem’s spin-off of LG Energy Solution, even if the parent company retains control, an increase in the subsidiary’s valuation may result in a discount in the parent company’s share price. Therefore, Kuaishou must strike a balance between Kling’s independent financing to alleviate the group’s financial strain, the sustained positive cash flow generated by its original businesses, and shareholder returns, in order to retain investors in the parent company.