Music streaming

NetEase in China relaunches the Hong Kong IPO of its music streaming business

Cloud Village, the music streaming arm of NetEase, runs the NetEase Cloud Music app that appears on a smartphone in this photo.

Fan Jianlei | China Visual Group | Getty Images

GUANGZHOU, China – Cloud Village – the music streaming arm of NetEase – is continuing its initial public offering in Hong Kong after delaying it earlier this year.

NetEase initially applied to register Cloud Village in August. Several reports at the time indicated that NetEase had delayed the IPO due to market volatility.

But on Tuesday, the company filed a revised prospectus with the Hong Kong Stock Exchange saying it was moving forward with listing.

There is no price or timeline for registration yet.

Chinese tech stocks have been beaten as Beijing introduced a slew of new regulations over the past year in areas ranging from data privacy to antitrust, which have caught many investors off guard.

Cloud Village manages NetEase’s music streaming business and the company claims to have 185 million monthly active users.

Revenue for the nine months ended Sept. 30 increased 51.5 percent year-over-year to 5.1 billion yuan ($ 799.6 million). Cloud Village’s revenue comes mainly from subscriptions, advertising and when users purchase virtual items on its platforms.

However, the company is still deeply unprofitable as it focuses on increasing user base and content while battling rival Tencent’s music streaming service.

“Despite a continued increase in its user base, Cloud Village may continue to experience gross and net losses and net operating cash outflows for the foreseeable future, including for the fiscal year ending December 31, 2021,” due to its continued investments in content, technology, marketing initiatives as well as research and development, ”the company said in a filing with the Hong Kong Stock Exchange.

Cloud Village’s parent company, NetEase, is one of the gaming giants in China and is looking to expand internationally through high-profile games including the titles “Lord of the Rings” and “Harry Potter” .

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