The media platform 36Kr, known as the "Entrepreneur's Gospel," is currently facing a dual blow of performance losses and delisting of stock price face value. Since its listing on NASDAQ in the United States, its stock price has been declining all the way, and now it has fallen by more than 95%, making it one of the worst performing Chinese concept stocks.
(Performance of Chinese concept stocks since listing)
According to the third quarter financial report released by 36Kr, the company's net profit has not yet recovered, and the development situation is not optimistic, including a significant decrease in value-added service revenue, a decrease in gross profit margin, an increase in general and administrative expenses, and an increase in net losses.
It is reported that 36Kr has moved away from the high-end office building Junhao Central Plaza overlooking Chaoyang Park and moved to the cheaper rental Hengtong Business Park. In addition, there has been a certain scale of layoffs. It is not difficult to see that as the "first domestic new economy service overseas listed stock", 36 Kr did not give the market a surprise after four years of listing.
More than 95% of stocks have broken through and become immortal stocks, facing pressure to keep their shell
In November 2019, 36Kr stepped onto the stage of NASDAQ with an issuance price of $ADS14.5 per share, raising $20.1 million in funds, a 61.7% reduction from the previously planned financing scale, and it burst at the opening. According to Wind data, the stock price of 36Kr has plummeted from its high point and has now dropped to about $0.585, a drop of over 95%, leaving only about $23 million in market value.
In terms of trading volume, from December 2023 to present, 36Kr has only had 3 days of trading volume exceeding 100000 shares, with a daily average trading volume of about 30000 shares. Based on current prices, the daily average trading volume is less than $20000. During the same period, the daily average trading volume of Chinese concept stocks such as TAL, Pinduoduo, and New Oriental ranged from millions to tens of millions of shares.
Based on current data, this company, which is committed to providing content and commercial services for China's new economy participants and is known as the "first overseas listed company in domestic new economy services," has performed at its peak in the capital market from the beginning.
On November 8, 2023, due to its closing price falling below $1 per share for the past 30 consecutive business days, 36Kr announced receipt of a notice from NASDAQ granting the company a 180 day qualifying period. If 36Kr's stock price reaches $1.00 or higher for ten consecutive trading days within this period, it will receive written confirmation that it meets the requirements; If the compliance criteria are not restored and other listing conditions are met, an additional 180 days of compliance period may be obtained.
That is to say, 36Kr has a maximum of 360 days to meet Nasdaq's requirements, otherwise it will face mandatory delisting.
Given the current sluggish trading volume, it may not be difficult to win the market value defense battle. But the problem that companies must face is that fundamentals are deteriorating. The latest financial report data shows that the company achieved operating income of approximately 13.3 million US dollars and net profit of -2.6 million US dollars during the reporting period.
From the prospectus of 36Kr, its business is mainly divided into three modules, namely online advertising, enterprise value-added services, and user subscriptions. According to financial data for the third quarter of 2023, in addition to growth in revenue from online advertising and subscription services, the revenue from value-added services for enterprises has significantly declined, with a year-on-year decrease of 39.6%. This is mainly due to the negative impact of macroeconomic challenges on certain offline activities and other value-added services.
As the most important revenue segment of 36Kr, the enterprise value-added service module, which provides comprehensive high-quality and in-depth services such as reporting, consulting, integrated marketing, and community services to corporate clients, surpassed advertising as the largest source of revenue in 2019 and was also the fastest-growing business segment. This has given 36Kr's "New Economy Service Company" some persuasiveness.
However, in the cold environment of the venture capital market, the huge decline in revenue from this module has once again tarnished this concept.
It is worth noting that from the data, 36Kr Company has also undergone a series of organizational restructuring such as layoffs, which has become one of the reasons for its losses recorded in the latest reporting period.
The financial report shows that its general and administrative expenses increased significantly by 122.6% to $5.1 million, mainly due to an increase in one-time expenses incurred in the quarter, including personnel severance pay, office lease termination fees, and an increase in credit loss provisions. This also implies that the company has encountered some difficulties and challenges in organizational optimization and operation, increasing the cost burden.
How to break through the problem of lack of core media licenses and growth
Since its initial listing, 36Kr has been hoping to break free from the constraints of "media platforms" and leverage the influence of media to launch other businesses. Its founder Liu Chengcheng also publicly stated, "Being solely a media company cannot escape the limitations of revenue and development."
Due to its focus on entrepreneurship incubation, investment driven services, and catching up with the development dividends of the times, the period from 2012 to 2019 was a golden age of 36 Kr. Ultimately, seeking to go public became a part of 36 Kr's pursuit of a larger commercial landscape.
However, the changes of the times always catch people off guard. Since the end of 2019, when 36Kr was officially launched, the market direction has changed. The decrease in hot money in the market and the coming end of the era of internet traffic dividends have led to a significant decrease in the frequency of investment and financing events.
The proportion of various revenues in the 36 Kr financial report can clearly show the gap: in the third quarter of last year, online advertising service revenue was $9.8 million, and enterprise value-added service revenue was $1.9 million. The value-added service revenue of enterprises accounts for less than 20% of advertising revenue, which is basically the same as the revenue from subscription services, which is the smallest revenue method ($1.6 million).
In addition, in the third quarter of 2023, the net loss of 36Kr was RMB 18.9 million, compared to RMB 2.5 million in the same period of 2022. The gross profit margin decreased by 6.1 percentage points, from 62.4% in the same period of 2022 to 56.3% in the third quarter of 2023.
The excessive reliance on advertising and subscription revenue once again tightly confines 36Kr to the definition of "media platform", and due to the lack of recognition from the capital market, it further increases the difficulty for 36Kr to seek breakthroughs.
The prominent attributes of media platforms have forced 36Kr to face another major flaw of its own, which is the lack of key licenses. At the beginning of its listing, 36Kr provided a risk warning in its prospectus, stating that it had not obtained the "Information Network Communication Audiovisual Program License" and "Internet News Information Service License" at the time, which may subject the company to administrative sanctions, which will have a significant adverse impact on the company's operating results and financial condition.
The reporter found from the website of the Ministry of Industry and Information Technology that Beijing Duoke Information Technology Co., Ltd. (the operating entity of 36 Kr) currently holds a certificate for information service business (limited to internet information services); According to China NetEase, as of November 9, 2023, 36Kr has not yet obtained the Internet News and Information Service Unit License; According to information from the State Administration of Radio and Television, as of now, 36Kr has not obtained the "Information Network Broadcasting Audiovisual Program License".
This means that 36Kr does not actually have the qualifications for news gathering and editing, which not only cannot compete with traditional portal websites such as Sina, but is also far behind the rise of Today's Headlines and One Point News in recent years. But in fact, 36Kr has a considerable number of journalists and editors who claim to be journalists and editors and carry out editorial work. This means that a portion of the company's original content business is in a fuzzy zone.
Going public in the United States, unable to escape systemic risks in Chinese concept stocks
However, choosing to go public in the United States has made it even more difficult for 36 Kr to escape the huge shock brought by the systemic risk of all Chinese concept stocks. Wang Shanfei, General Manager of Shanghai Liangwei Asset Management Co., Ltd., told reporters, "In recent years, due to various factors, peripheral capital market investors have been concerned about the future of Chinese concept stocks, resulting in serious divestment of Chinese concept stocks and causing a huge decline in recent years."
The same goes for 36Kr. Since its listing on NASDAQ in 2021, the company's stock price has been continuously declining. As of now, the stock price of 36Kr has fallen by 95.93%, making it one of the worst performing Chinese concept stocks. Of course, there are also irrational factors influencing it, but the problems currently faced by 36Kr are also objectively present.
(36 Krypton Company's stock price has fallen by over 95% since its listing)
Now, 36Kr hopes to once again bet on achieving the next stage of leap in the market. According to the latest performance exchange meeting disclosed by the company, the company is introducing AI technology into various aspects of its development, hoping to improve in image generation, video production, text editing, and data collection, reduce operating costs, and thereby unleash higher production efficiency.
From the various performances of 36Kr, it hopes to constantly seek new ways in terms of content to tell a story that goes beyond traditional media for the capital market. However, based on its four-year listing performance, 36Kr still has a long way to go.
