On August 20, shares of KUAISHOU-W (HKEX: 01024) plunged more than 11% during Hong Kong trading hours, with the stock last changing hands at HK$33.96, down 10.16% at the time of writing. The sharp sell-off followed the company's release of its second-quarter earnings report after the market closed the previous day.

According to the financial results, KUAISHOU-W generated total revenue of RMB 35.535 billion in Q2, representing a modest 1.4% year-on-year increase. However, adjusted net profit came in at RMB 3.913 billion, a significant 30.3% decline compared to the same period last year. Gross profit fell 6.0% to RMB 18.328 billion, with the gross margin contracting to 51.6% from 55.7% a year earlier.

The profit downturn was primarily attributed to shifts in the cost structure, notably a substantial surge in research and development expenses. R&D spending climbed 34.7% year-on-year to RMB 4.58 billion, driven largely by AI-related training costs and infrastructure investments. In contrast, the company trimmed its sales and marketing expenditures, which dropped 5.5% year-on-year to RMB 9.9 billion during the quarter.