Executive Summary
Kuaishou’s mid-life crisis is unfolding as the company navigates significant leadership changes and strategic realignments. Key takeaways include:
– Over ten vice-president level executives have departed since 2023, including AI and local business leaders, signaling internal turbulence.
– Strategic focus has shifted from technology investment to commercialization, with organizational restructuring merging local services and advertising.
– Financial performance shows slowing e-commerce GMV growth and increased reliance on AI business Kling for future revenue streams.
– Regulatory challenges and competitive pressures in e-commerce and local services demand urgent operational adjustments.
– Investors should monitor execution risks and Kling AI’s commercialization progress as indicators of long-term viability.
Navigating Kuaishou’s Mid-Life Crisis
Kuaishou, once a darling of China’s tech boom, now faces a pivotal moment as executive departures and strategic shifts define its trajectory. The company’s mid-life crisis has become apparent with over a dozen senior leaders exiting in just two years, raising questions about stability and direction. This period of transformation reflects broader challenges in China’s internet sector, where balancing innovation with profitability is paramount. For global investors, understanding these dynamics is crucial to assessing Kuaishou’s position in an increasingly competitive market.
The recent flurry of high-level changes underscores a deeper organizational realignment. As Kuaishou pivots from aggressive expansion to focused commercialization, the departures of key figures in AI and local services highlight the tensions inherent in this transition. With regulatory scrutiny intensifying and rivals like Douyin advancing, Kuaishou’s ability to navigate this mid-life crisis will determine its future in China’s digital economy. This analysis delves into the factors driving these changes and their implications for stakeholders.
The Leadership Drain: Unpacking Kuaishou’s Executive Exodus
Kuaishou’s mid-life crisis is most visible in its management turnover, with more than ten vice-president level executives departing since late 2023. This exodus includes pivotal roles in technology, commerce, and operations, creating voids in strategic leadership. The trend accelerated in 2025, with two high-profile exits in September alone: Zhang Di, head of Kling AI, and Xiaogu, senior vice president overseeing local services. Their departures, amid critical growth phases for their respective divisions, suggest underlying friction in Kuaishou’s corporate strategy.
Zhang Di’s exit was particularly notable, given his role in building Kling AI from inception. As the technical core of Kling’s development, his leadership drove rapid iterations, including versions 2.0 and animated canvas features. However, after his departure to Bilibili, update frequency slowed, indicating potential disruptions. Similarly, Xiaogu’s removal from local services followed significant GMV growth, raising questions about the timing. Sources close to the company noted that CEO Cheng Yixiao (程一笑) did not issue a customary all-staff email praising Zhang Di’s contributions, hinting at unresolved tensions.
Broader Trend of VP-Level Exits
Beyond recent cases, Kuaishou has seen a steady stream of senior departures since Cheng Yixiao (程一笑) assumed the chairman role in October 2023. Key exits include:
– Yuan Shuai (袁帅), vice president of Magnet Engine, who oversaw advertising systems.
– Yu Haibo (余海波), head of security and compliance, critical for regulatory adherence.
– Wang Ben (王犇), international e-commerce algorithm lead, impacting global expansion.
– Wang Zhongyuan (王仲远), multimodal research head, affecting AI innovation.
Many of these executives had tenure exceeding five years, suggesting a loss of institutional knowledge. The cumulative effect risks diluting Kuaishou’s operational cohesion and strategic focus, exacerbating its mid-life crisis. Investors should track whether new appointments can stabilize the leadership vacuum.
Organizational Restructuring and Strategic Pivot
Kuaishou’s mid-life crisis has catalyzed a comprehensive organizational overhaul, aimed at streamlining operations and prioritizing commercialization. In September 2025, the company announced the integration of its local services division with lead advertising businesses, rebranding it as the Life Services Department. This move, overseen by senior vice president Wang Jianwei (王剑伟), consolidates previously siloed units to enhance merchant efficiency and provide one-stop solutions. The restructuring mirrors adjustments at rivals like ByteDance, reflecting industry-wide trends toward unified commerce ecosystems.
The reorganization also involved reassigning lead advertising teams from the commercialization division to life services, enabling tighter alignment between marketing and transaction processing. Liu Xiao, familiar with lead advertising, now heads the department, reporting to Wang Jianwei (王剑伟). This shift reduces the autonomy of local services, previously a first-tier business unit, indicating a strategic downgrade despite its rapid growth. For Kuaishou, this signals a pragmatic approach to resource allocation, favoring integrated revenue streams over standalone expansions.
Shift from Technology to Commercialization
Kuaishou’s strategic pivot is evident in its reallocated investments. R&D spending dropped from RMB 150 billion in 2021 to RMB 122 billion in 2024, with the ratio to revenue falling from 18.5% to 9.6%. Concurrently, sales and marketing expenses rose to 30% of revenue in Q2 2025, dwarfing R&D’s 9.7%. This rebalancing responds to investor demands for profitability amid slowing top-line growth. The departures of technology-focused executives like Yuan Shuai (袁帅) and Wang Zhongyuan (王仲远) further underscore this transition.
Employee reductions from 28,100 in 2021 to 24,600 in 2024 complement this efficiency drive. However, the risk lies in undermining long-term innovation, particularly in AI, where Kuaishou faces stiff competition. The company must navigate this mid-life crisis by striking a balance between immediate monetization and sustainable technological advancement. For now, commercialization takes precedence, as seen in the heightened focus on Kling AI’s revenue targets and operational synergies.
Financial Performance and Market Implications
Kuaishou’s mid-life crisis unfolds against a backdrop of mixed financial results. In H1 2025, revenue reached RMB 676.54 billion, up 12.04% year-over-year, with net profit at RMB 89 billion, a 9.9% increase. While profitable, growth rates have moderated compared to 2024’s 1238.8% profit surge, highlighting maturation pressures. Revenue composition remains dominated by online marketing services (56.4%), followed by live streaming (28.7%) and other services (14.9%). The declining contribution of live streaming underscores the need for diversification.
E-commerce GMV growth has slowed, reaching RMB 691.2 billion in H1 2025, up 16.5% from the previous year. This deceleration, coupled with the loss of top influencer Xinba, who accounted for up to 25% of GMV at his peak, poses significant challenges. Conversely, Kling AI emerged as a bright spot, with Q2 2025 revenue exceeding RMB 250 million and users doubling to 45 million between April and July. CEO Cheng Yixiao (程一笑) emphasized Kling’s positive gross margins in inference computing, reinforcing its potential as a new growth engine.
Investor Sentiment and Stock Performance
Kuaishou’s Hong Kong-listed shares surged up to 130% in 2025, partly driven by Kling AI optimism. However, executive departures and strategic uncertainties could dampen enthusiasm. The company’s heightened sales expenses ratio suggests aggressive user acquisition and monetization efforts, which may yield short-term gains but strain long-term margins. Investors should monitor:
– Kling AI’s ability to meet doubled 2025 revenue targets.
– Integration efficiencies from organizational restructuring.
– Regulatory resolutions, such as the investigation into Chengdu Kuaigou Technology.
Balancing these factors is key to navigating Kuaishou’s mid-life crisis. While the stock’s performance reflects confidence in AI, sustained growth requires execution stability and innovation retention.
Challenges in Core Business Areas
Kuaishou’s mid-life crisis is compounded by sector-specific headwinds in e-commerce, local services, and content ecosystems. In e-commerce, reliance on top influencers like Xinba created vulnerability, as his August 2025 exit left a significant GMV gap. Although Kuaishou is cultivating alternative hosts and supply chain partnerships, recovery remains gradual. The platform’s push into industrial clusters in the Pearl and Yangtze River Deltas aims to mitigate this by directly connecting manufacturers with creators, reducing dependency on individual stars.
Local services, despite 200% GMV growth in 2024, operate from a small base and face intense competition from Meituan, Alibaba, JD.com, and Douyin. Kuaishou’s strategy emphasizes lower-tier cities, where GMV jumped over 220%, but differentiation is limited. The integration with lead advertising seeks to leverage existing merchant relationships for cross-selling, yet scalability concerns persist. Without distinct competitive advantages, Kuaishou’s local services may struggle to achieve profitability amid rivals’ deep pockets and entrenched networks.
Content and Regulatory Hurdles
Regulatory pressures add another layer to Kuaishou’s mid-life crisis. In September 2025, the State Administration for Market Regulation launched a probe into Chengdu Kuaigou Technology, operator of Kuaishou Shop, for potential E-commerce Law violations. Simultaneously, the Cyberspace Administration of China criticized the platform for excessive celebrity gossip on hot search lists. Legal disputes, including RMB 89.1 million in copyright penalties for infringing content, further strain resources.
Kuaishou’s response includes enhancing content quality metrics over engagement duration and implementing AI-human hybrid moderation. The OneRec generative recommendation model, deployed in Q2 2025, aims to improve content relevance and user retention. However, these measures must offset reputational damage and align with evolving regulatory expectations. For investors, compliance risks represent a critical variable in assessing Kuaishou’s stability during this transitional phase.
The AI Ambition: Kling’s Promise and Pitfalls
Kling AI stands at the forefront of Kuaishou’s strategy to overcome its mid-life crisis. Established as a first-tier department in April 2025, Kling targets becoming a global leader in AI visual expression, serving diverse users from casual creators to professionals. Its rapid user growth and revenue acceleration demonstrate potential, but challenges abound. Video generation delays and peak-time wait times have drawn user complaints, while competition intensifies with OpenAI’s Sora2, Google’s Veo3, and ByteDance’s Dreamina.
Kling’s commercialization hinges on expanding use cases. Cheng Yixiao (程一笑) noted that paying users are primarily professionals in design, advertising, and media, indicating a B2B focus. The platform’s integration with e-commerce and marketing could drive synergies, but technological parity with global rivals is essential. With Zhang Di’s departure, execution risks rise, particularly in maintaining innovation velocity. Kuaishou must ensure that Kling’s development does not stagnate amid broader commercialization pressures.
Competitive Landscape and Strategic Imperatives
Kuaishou’s mid-life crisis necessitates a clear AI roadmap to defend market share. Key actions include:
– Accelerating Kling’s iteration speed to match rival offerings.
– Leveraging AI to enhance core services, such as personalized recommendations and creator tools.
– Exploring partnerships to offset resource constraints in research.
Success in AI could redefine Kuaishou’s value proposition, but it requires sustained investment and talent retention. The company’s decision to double Kling’s 2025 revenue target and increase inference computing投入 reflects commitment, yet balancing this with profitability goals remains a tightrope walk.
Path Forward for Kuaishou and Stakeholders
Kuaishou’s mid-life crisis represents a critical inflection point, blending operational challenges with strategic opportunities. The executive departures, while disruptive, may pave the way for a more agile, commercially focused organization. However, the company must address e-commerce dependencies, regulatory compliance, and AI innovation to sustain growth. Investors should evaluate Kuaishou based on its ability to execute restructuring plans, monetize Kling AI, and navigate competitive and regulatory landscapes.
For stakeholders, proactive engagement is vital. Monitor quarterly reports for updates on GMV trends, Kling’s revenue contributions, and leadership stability. Diversify exposure to account for execution risks, and consider the long-term implications of China’s tech sector evolution. Kuaishou’s journey through this mid-life crisis will test its resilience, but with disciplined strategy and adaptive leadership, it can emerge stronger. Stay informed through reliable sources and industry analyses to make data-driven decisions in this dynamic environment.