Meitu, a Chinese imaging software company, saw its shares rise nearly 3% to HK$8.5 (US$1.09) on June 25, returning to its 2016 IPO price for the first time in years. The stock later eased to HK$8.3, giving the firm a market capitalization of approximately HK$38 billion (US$4.9 billion).

The rally comes after Meitu announced plans to launch a new AI Agent product focused on imaging, signaling deeper expansion into artificial intelligence.

Founded in 2008, Meitu initially gained popularity with its photo editing apps but struggled with diversification into hardware, short video, and social platforms. Its stock once tumbled to as low as HK$0.5 following its Hong Kong Stock Exchange debut at HK$8.5 per share in December 2016.

Since 2020, the company has refocused on its core imaging and design software, transitioning from an advertising-driven model to a subscription-based business. It credits AI-powered tools for boosting paid user growth and driving an improvement in financial performance.

In May, Meitu entered a strategic partnership with Alibaba to collaborate on AI technology, ecommerce, and cloud computing. As part of the agreement, Meitu issued US$250 million in convertible bonds to Alibaba, carrying a three-year term and an annual interest rate of 1%. The company said net proceeds totaled approximately US$249.6 million.

🔗 Source: Huxiu

🧠 Food for thought

1️⃣ Meitu’s subscription pivot proves rare success in Chinese tech transformations

Meitu’s return to its IPO price represents a remarkable turnaround story in Chinese tech, where business model pivots often fail.

After going public in 2016 at HK$8.50, Meitu struggled significantly with diversification attempts, reporting revenues of $239.5 million but net losses of $193 million in 2017 due to excessive marketing and R&D expenses 1.

The company’s shift from advertising-based revenue to subscriptions since 2020 has driven remarkable recovery, with 2022 revenues reaching approximately RMB 3.34 billion ($490 million), representing 8.9% year-over-year growth 1.

This transformation was anchored in returning to core competencies in imaging technology while embracing AI innovation, demonstrating that focus can be more valuable than diversification for tech companies with strong foundational products.

The recovery is particularly notable in the context of China’s tech sector, where many companies that attempted similar pivots failed to regain investor confidence after significant stock price declines.

2️⃣ Strategic tech partnerships increasingly focused on AI infrastructure over equity investments

The Meitu-Alibaba partnership reveals how major tech collaborations have evolved, prioritizing technological integration and operational synergies over traditional investment structures.

While structured as a $250 million convertible bond with a modest 1% interest rate and HK$6.00 conversion price 2, the real value lies in combining Meitu’s AI imaging capabilities with Alibaba’s cloud infrastructure and e-commerce expertise.

Recent Meitu developments