On November 8, 36Kr Holdings successfully landed on the NASDAQ Stock Exchange, but broke immediately after listing, with the biggest intraday drop of more than 13%. As of the close, 36Kr Holdings shares fell 9.93% to close at $13.06, with a total market capitalization of $490 million.

Not only the break, 36Kr Holdings's fund-raising amount has also shrunk. According to 36Kr Holdings's latest IPO documents, the IPO offering has been downgraded to 1.38 million American depositary shares (ADS), raising up to $24.15 million, down more than 60 per cent from the amount announced 10 days ago.

一

A story about "China's new economic service provider"

Different from the media platform recognized by the public, 36Kr Holdings positions himself as an outstanding brand and open platform dedicated to serving the participants in China's new economy.

36Kr Holdings started in the media business. In 2010, 36Kr Holdings website was officially launched, mainly in science and technology, venture capital content. Since then, 36Kr Holdings based on venture media, has laid out a shared office business "krypton space", investment and financing platform "whale accurate" and so on. But in fact, 36Kr Holdings Group's shared office business and investment and financing platform business development is not smooth, the listing is only the split out of the core media business.

In 2016, Feng Dagang, former co-founder of China Business Weekly, joined 36Kr Holdings, and the company's media business began to operate independently. 36Kr Holdings's media business is mainly concentrated in the fields of science and technology, venture capital and pan-finance. According to the data, 36Kr Holdings has published more than 100000 articles, with a monthly PV of nearly 350 million. Liu Chengcheng, founder of 36Kr Holdings, mentioned that almost all the big start-ups in China have been reported by 36Kr Holdings.

There is no doubt that the content is 36Kr Holdings's core competitiveness, the company gathers traffic with high-quality content, and then realises the traffic through advertising and value-added services. This business model is also a typical cash model for the media, and the ceiling can be seen in the future. To open up the growth space, 36Kr Holdings needs a bigger market. Krypton tells investors a story about "China's new economic service provider", targeting the enterprise service market.

Wang Xiao of Jiuhe Venture Capital, an investor in 36Kr Holdings's seed wheel, said in a media interview that 36Kr Holdings is providing a wide range of services of information, capital, talent and business opportunities to participants in the new economy. In a sense, 36Kr Holdings is an enterprise service company of To B.

36Kr Holdings CEO and co-chairman Feng Dagang said: "our position should be the service providers and connectors of the new economy. If there is one more, we should be the partners of all the practitioners of the new economy." Judging from the situation of the company in the past few years, our business will have a relatively obvious counter-cyclical and will not have a great impact with the changes in the cycle. "

The story of the new economic service provider is obviously more attractive to investors. According to the CIC report, the commercial service market focusing on the new economy mainly includes online advertising services, enterprise value-added services and subscription services. The total market size of these three market segments increased from $7 billion in 2014 to $20.2 billion in 2018, with a compound annual growth rate of about 30.3%. It is expected to grow at a compound annual growth rate of about 22.5% and will reach $55.6 billion by 2023.

From the perspective of 36Kr Holdings's income structure, the company's corporate service income is indeed growing rapidly. 36Kr Holdings's income comes from three parts: advertising, enterprise value-added services and user subscriptions. In the first half of 2019, the revenue of value-added services exceeded that of online advertising for the first time, becoming the company's main source of revenue.

二

The lack of license plate becomes a risk point, and the operating cash flow is tight.

Judging from the shrinking amount of money raised by 36Kr Holdings and his first-day break, this story about To B has failed to convince Wall Street investors for the time being. The reason is that although 36Kr Holdings is trying to expand his business to other areas, his core competitiveness is still content, and the content has great uncertainty and policy risks.

As 36Kr Holdings mentioned in his risk warning to investors, 36Kr Holdings's lack of "Internet News Information Service license", "Information Network dissemination Audio-Visual Program license" and "Internet News and Information Service license" may subject the company to administrative sanctions, which will have a significant adverse impact on the company's operating results and financial position. In fact, not only 36Kr Holdings, but all domestic new media companies will face policy risks.

At the same time, the operation uncertainty of self-media business is also very great. On the one hand, it is uncontrollable and unstable from the platform account. On the other hand, the platform is highly dependent on excellent creators, and the content is unsustainable. An article can make a self-media company rise in an instant, while an article can also bring down a business that has accumulated over the years.

From a financial point of view, 36Kr Holdings's business income growth is very good, the growth rate is eye-catching. In 2018, the company's operating income was 299 million yuan, an increase of 148% over the same period last year; in the first half of 2019, operating revenue was 200 million yuan, an increase of 179% over the same period last year.

But 36Kr Holdings's profitability still needs to be improved. In the first half of 2019, the cost of the company's main business increased significantly, to 138 million yuan from 48.04 million yuan in the same period last year. The company is still at a loss in the first half of 2019. In 2017, 2018 and the first half of 2019, 36Kr Holdings's net profit was 7.92 million yuan, 40.52 million yuan and-45.5 million yuan respectively, and the net profit attributable to shareholders was 5.09 million yuan,-80.57 million yuan and-313 million yuan respectively.

In addition, 36Kr Holdings's operating cash flow is tight, with operating activities cash flow of-11.44 million yuan in 2017,-45.6 million yuan in 2018 and-94.88 million yuan in the first half of 2019. At present, the general environment of the capital market is not good, whether it can achieve self-hematopoiesis and good cash flow is the focus of investors' attention. It is still unknown when 36Kr Holdings's cash flow will become positive and when it will be profitable.

三

Conclusion

The capital market has always been not interested in companies in the content industry. Hu sniff delisted from the new third board due to poor financing, and Wu Xiaobo's Bajiuling wanted to backdoor Quantong Education and eventually end up listing A shares. For 36Kr Holdings, although the amount of capital raised is not large, from a certain point of view, the smooth listing can also be regarded as another form of success.

Can 36Kr Holdings change the view of the capital market on the content industry on his own after listing? Not exactly. Although 36Kr Holdings has brought a story of "China's new economic service provider" to investors, Wall Street does not seem to like the story of To B. The uncertainty of the content industry is great, and the way of cashing out advertising is greatly affected by the economic cycle. 36Kr Holdings needs to polish his more core competitiveness in order to prove its commercial value. What is worth pondering is whether 36Kr Holdings can really empower enterprises in the new economy and become an indispensable role in the capital market and the industrial chain.