The latest: Social networking platform operator Newborn Town Inc. (9911.HK) said late Tuesday its social networking business revenue is expected to reach approximately 625 million yuan ($98 million) to 650 million yuan in the first quarter of 2022, representing an increase of approximately 65% from the corresponding period of 2021.

Looking up: The group’s revenue rose mainly due to gains in developed markets such as Europe, the U.S., Japan and South Korea. During the latest three-month period, cumulative downloads for its social apps reached 386 million, representing an increase of approximately 12% from the final quarter of 2021.

Take Note: Revenue from the company’s new businesses is expected to decrease by 70% in the first quarter to between 40 million yuan and 50 million yuan, mainly due to “the impact of the iteration of the group’s existing traffic monetization business” and the fact that its niche game business has not yet entered the stage of scale promotion.

Digging Deeper: Founded in 2009, Newborn Town operates multiple social platforms open to the world, combining entertainment elements such as dating, group voice chats, livestreaming and short video. It was listed in Hong Kong on the last day of 2019. With the recent hype of the metaverse concept, the company also wants a piece of the action, stating that it will continue to explore the metaverse social scene to enhance synergies between social activities and gaming. Previously focused on emerging markets, the company has established mainstream social platforms in the Middle East, Southeast Asia and South Asia, and began to achieve breakthroughs in developed markets such as Europe, the U.S., Japan and South Korea last year, doubling annual revenue to a record high of 2.36 billion yuan.

Market Reaction: After opening with a modest 2% gain on Wednesday morning, Newborn Town’s shares moved steadily downward and closed 2% lower at HK$2.93 at the midday break. The stock now trades close to its 52-week low.

Translation by Jony Ho

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