Cash-hungry news app Qutoutiao raises another USD 33m via public offering

The firm just had raised USD 171m from Alibaba

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Cash-hungry news app Qutoutiao raises another USD 33m via public offering

China’s No. 2 mobile content aggregator Qutoutiao has sold approximately 3.3 million American Depositary Shares in a public offering at USD 10 apiece, an 8% discount compared with the closing price on the previous trading day, its prospectus filed Wednesday with the United States Securities and Exchange Commission shows.

The net proceeds of the public offering, which amount to approximately USD 31 million, will be used for general corporate purposes, said Qutoutiao.

Meanwhile, selling shareholders have also offered 6.7 million ADSs at USD 10, but the proceeds will not go to the company.

This fundraising came shortly after Qutoutiao received a USD 171 million convertible note from Alibaba, which can convert the loan into a 4% ownership stake in the mobile news aggregator.

It’s also not long after the firm’s initial public offering in September 2018, which priced the company at USD 7 per ADS and raised USD 84 million.

The company’s ferocious fundraising appetite may indicate that its game of playing catch-up with China’s top mobile news aggregator Jinri Toutiao will continue to be a costly one.

Qutoutiao caters to China’s lower-tier cities with light entertainment content. It grows its user base through loyalty points that can be earned by referring new users, or by consuming and engaging with content. These points can then be redeemed for small amounts of real money.

The company’s latest prospectus shows that it had 30.9 million daily active users on average in the last quarter of 2018. For comparison, Jinri Toutiao claimed that it had 120 million daily active users in August 2018.

Qutoutiao, whose name translates to “fun headlines” made a net loss of RMB 1.9 billion (USD 282.5 million) in 2018, almost 20 times its 2017 loss of RMB 94.8 million, according to the prospectus.

Qutoutiao, closed at USD 10 on Wednesday, down from the closing price of $10.88 one day earlier.

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