Shares of KUAISHOU-W (HKEX: 01024) experienced a notable increase in early trading, rising nearly 5%.

At the time of writing, the stock was up 4.21% to HK$48.5, with a trading turnover of HK$1.607 billion.

The catalyst for this movement appears to be news that the company is planning to spin off its Kling AI unit for an independent listing, with a target valuation of approximately $20 billion.

During the first-quarter earnings call, Kuaishou's Chairman and CEO, Cheng Yixiao, provided details on the unit's performance, stating that Kling AI's operating revenue exceeded 650 million yuan during the period, representing a year-on-year growth of over 300%.

He also noted that by March 2026, Kling AI's annualized revenue run rate (ARR) was close to $500 million.

Analysts at Morgan Stanley have pointed out that Kling AI's ARR had already reached $500 million by March, significantly surpassing their previous forecast of $380 million.

Consequently, the firm has raised its ARR forecast for the end of 2026 from $860 million to $1 billion.

Goldman Sachs also holds a positive view, suggesting that Kling AI's ARR has the potential to reach $1 billion by year-end.

The investment bank emphasized that "Kling's growth momentum has far exceeded expectations, and despite intensified competition from rivals at the beginning of the year, Kling has maintained its leading model capabilities."