(Yicai Global) May 25 -- Shares of Kuaishou Technology slumped nearly 12 percent today after the Chinese short video platform reported adjusted net loss of CNY4.9 billion (USD763.7 million) in the first quarter, up 13.2 percent annually, as higher valuations raised the fair value of preferred shares.

Kuaishou Technology [HKG: 1024] shares closed down 11.46 percent at HKD205.6 (USD26.49) today, with the Hang Seng Index gaining 1.25 percent for the day.

Kuaishou’s revenue reached CNY17 billion (USD2.6 billion) in the first three months, up 36.6 percent year on year, according to the company’s financial results released yesterday.

Of this, online marketing services income surged 161.5 percent to CNY8.6 billion from CNY3.3 billion in the same period last year, contributing more than 50 percent to total revenue for the first time.

The Beijing-based company did not provide future earnings forecasts.

The decline in Kuaishou Technology’s fair value of convertible and redeemable preferred stocks was CNY51.3 billion in the first quarter, the largest source of its loss within the reporting period.

The change in the fair value is closely related to a company’s valuation, a partner from an accounting firm noted, adding the liabilities that are indicated in the financial statement will increase instead with rising corporate performance and valuation, which will further spur an increase in valuation of corresponding preference stocks.

The decrease of CNY51.3 billion in the fair value of Kuaishou’s preferred shares may result from the surge in its issuing price of HKD115 (USD14.8) compared with its per-share valuation at the end of last year, Securities Daily reported.

All the company’s preferred stocks were converted to ordinary shares with Kuaishou’s listing, which means the impact of the change in the preferred shares’ fair value will not be reflected in the second-quarter earnings report, the report added, citing an insider at Kuaishou.

The short video platform’s online marketing services revenue reached CNY8.6 billion in the first quarter, up 161.5 percent from the previous year, while revenue from its live-streaming business, slumped 19.5 percent annually to CNY7.25 billion.

Kuaishou’s revenue from other services, including e-commerce, was CNY1.2 billion, up a whopping 589.1 percent from last year. The growth was mainly due to the rapid expansion of the firm’s e-commerce business, with total merchandise volume reaching CNY118.6 billion (USD18.5 billion) in the first three months, surging 219.8 percent annually.

The number of daily active users of Kuaishou’s Chinese apps and mini programs was 379.2 million in the first quarter, a 26.4 percent annual gain.

Kuaishou app’s average daily active users numbered 295 million in the quarter, rising 16.6 percent from 2020. And its average monthly active users reached 520 million, up 5 percent annually.

During the reporting period the average daily usage time per daily user was 99.3 minutes, up 16.5 percent annually and 10.5 percent from the 89.9 minutes disclosed in last year’s fourth quarter.

Editor: Peter Thomas