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Zhihu Inc. (ZH): All You Need To Know About this Online Q&A Company

Zhihu Inc. is the latest Chinese technology company which decided to list on the New York Stock Exchange. The IPO raised $522.5 million with issue price US$9.5 for each ADS. However, come as a disappointment, the stock closed at US$8.5 on its debut. Is it the right time to add Zhihu Inc. in your portfolio?

What is Zhihu?

As stated in its prospectus, Zhihu is an iconic online content community where people come to seek inspiration, find solutions, make decisions, and have fun. The mission of the company is to to empower people to share knowledge, experience, and insights, and to find their own answers.

Zhihu is the largest Q&A-inspired online community and one of the top five comprehensive online content communities in China, both in terms of average mobile MAUs and revenue in 2020. Zhihu is also recognized as the most trustworthy online content community and widely regarded as offering the highest-quality content in China.

As of December 31, 2020, Zhihu had 43.1 million cumulative content creators, who had contributed 315.3 million questions and answers. During fourth quarter of 2020, 75.7 million average MAUs generated 675.7 million average monthly interactions within the community.

Market Opportunities

China’s online content community market is still in an early stage with significant growth potential. The market size of China’s online content community in terms of revenue increased from RMB38.6 billion in 2015 to RMB275.8 billion in 2019, and is expected to increase to RMB1.3 trillion in 2025, representing a CAGR of 30.3% from 2019. The user base of online content community in China has also expanded significantly from 516.2 million in 2015 to 773.0 million in 2019, and is expected to reach 1.0 billion in 2025, according to CIC. Revenue per user of China’s online content communities was RMB356.7 in 2019, growing five fold since 2015, and is expected to further increase to RMB1,292.4 in 2025, representing a CAGR of 23.9% from 2019.


Zhihu’s revenue are generated by four different channels. Zhihu started to offer online advertising in 2016, introduced paid content in 2018 and Yan Selection membership program in the first half of 2019, and formally launched content-commerce solutions in early 2020. In future, online education and e-commerce related services will be added as new monetization channels. Zhihu’s revenue increased from RMB670.5 million in 2019 to RMB1.35 billion in 2020. Net loss was RMB1.0 billion in 2019 and narrow down to RMB517.6 million in 2020.

Operation Highlights

MAUs increased by 33.0% from 56.9 million in the fourth quarter of 2019 to 75.7 million in the fourth quarter of 2020. 78.7% of our MAUs were under 30 years old in December 2020.

Revenue increased by 101% from RMB 670.5 million in 2019 to RMB 1,352.1million in 2020. Gross Profit Margin increased from 46.5% in 2019 to 56% in 2020.

Total operation expense decreased slightly from RMB 1,370.1 million to RMB 1,360.6 million in 2020.

Net Loss was reduced from RMB 1,004 million in 2019 to RMB 517.5 million in 2020.


Base on the 2020 result, Zhihu has shown its tremendous growth opportunity in term of revenue and MAUs. More importantly, 78.7% MAUs were under 30 years old which mean Zhihu is one of the youngest generation technology platform and still at its early development stage. As more resource will use for future growth, Zhihu is not expected to be profitable in nearby future. To sum up, Zhihu can be a long term investment tool for capturing the growth opportunity of generation Y and generation Z in China.

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