Kuaishou Technology's announcement of a capital injection of approximately $2.8 billion for its artificial intelligence subsidiary, Kling AI, has led to a decline in its share price. Initially, shares rose over 5% at the Hong Kong market open but later fell to trade 0.1% lower.
The funding round, which raised a total of 19 billion yuan ($2.79 billion), includes a $200 million investment from Tencent, a major player in the tech industry and a competitor with its own generative AI platform, Hunyuan. This investment will dilute Kuaishou's stake in Kling AI to 68%.
The funding is significant as it targets a valuation of $15 billion for Kling AI, which is positioning itself to expand beyond the Chinese market and claims to serve over 60 million creators globally since its launch in June 2024.
Kuaishou, being the second most popular short-video platform in China with 700 million monthly active users, is navigating a competitive landscape in AI-driven video generation, which has seen increased interest and investment from various stakeholders