Is Xiaohongshu's major shareholder selling shares valued at 20 billion?

　　As the US ban on TikTok is set to take effect on January 19, TikTok “refugees” have turned to another social e-commerce platform, Xiaohongshu which is known as the “Chinese version of IG”, has become the most downloaded free app on iOS this week.

　　Picture from the Internet

　　Recently, many A-share listed companies including GELISE, Aimei, Ruoyuchen, Xinhe, Jetsen, and Online and Offline have stated on interactive platforms this month that they will open stores and accounts on Xiaohongshu, or promote their products on the Xiaohongshu platform.

　　A-share Xiaohongshu concept stocks continued to be strong on January 16, with Yiwangyi Chuang, Tianxiaxiu, Yaowang Technology, and many other stocks rising for three consecutive days, and Laiyifen and Haoshangni rising for six consecutive days.

　　According to Bloomberg, Xiaohongshu's major shareholders are discussing reducing their holdings by at least US$20 billion. According to people familiar with the matter, GGV Capital, GSR Ventures, and Tiantu Capital are in talks to sell part of their shares. Sequoia China and Hillhouse Capital have expressed interest in this, and Tencent is also considering whether to increase its holdings.

　　If the above transaction is completed, Xiaohongshu's valuation will return to its peak level in 2021 and boost its initial public offering (IPO) prospects. Xiaohongshu has repeatedly been rumored to be going public in recent years. In November 2021, when it raised its E round of financing, its valuation was about US$20 billion. In 2023, its valuation fell to US$14 billion. In July 2024, when it raised its E+ round of financing, its valuation was about US$17 billion.

　　However, if potential buyers decide to wait and see, especially given the still unclear situation of TikTok, then the negotiations may still fall apart.

　　Overall, the popularity of the Xiaohongshu concept continues to surge, which may lead to a new round of great investment opportunities in the social media sector.