CEO of Alibaba- and Tencent-backed news app Qutoutiao resigns amid widening losses

The company’s share price has dived more than 60% in the past three months.

Photo:Google-Image

China’s second most popular mobile content aggregator Qutoutiao announced on Monday after the market closed that its co-founder Lei Li has resigned as CEO due to personal reasons, but will remain as director and vice chairman.

Eric Siliang Tan, Qutoutiao’s co-founder and executive chairman, will replace Li as CEO.

The statement was made when the company disclosed that it made a net loss of RMB 688.2 million (USD 102.5 million) in the first quarter of 2019, more than doubling its net loss of RMB 302.6 million in the same period in 2018.

Qutaotiao booked RMB 1.1 billion in first quarter revenue, marking an increase of 373.3% from RMB 236.4 million in the first three months of 2018.

The platform’s sales and marketing expenses alone overtook revenue to reach RMB 1.3 billion, an increase of 257.4% year-on-year, due to the company’s continued efforts to acquire new users, in turn increasing costs related to its loyalty program.

Qutoutiao’s average monthly active users reached 111.4 million, representing an increase of 297.4% from 28 million in the first quarter of 2018 and an increase of 18.7% from 93.8 million in the fourth quarter of that year.

The company recently completed two fundraising activities. On March 29, the company entered into a USD 17.1 million convertible loan agreement with Alibaba Investment Limited, an affiliate of Alibaba Group. That loan can be converted into 4% ownership for Alibaba. Several days later, Qutoutiao collected USD 31 million in net proceeds from a public offering of approximately 3.3 million American depositary shares at the price of USD 10.

Qutoutiao’s share price slid down to USD 4.78 in after-hours trading on Monday, down by 6.64% compared to the closing price of USD 5.12. The company’s share price has dived more than 60% in the past three months.

According to Qutoutiao’s annual report shared with the United States Securities and Exchange Commission on April 11, Tencent holds 1.5% voting power.

Contact the writer at [email protected]