Chinese tech giant NetEase revives Hong Kong IPO of its music streaming arm

GUANGZHOU, China — Cloud Village — the music streaming arm of NetEase — is pushing ahead with an initial public offering in Hong Kong after reportedly delaying it earlier this year.

NetEase originally filed for the listing of Cloud Village in August. Several reports at the time said that NetEase delayed the IPO due to volatile markets.

But on Tuesday, the company filed a revised prospectus with the Hong Kong stock exchange indicating that it is going ahead with the listing.

There is no pricing or timing of the listing yet.

Chinese technology stocks have taken a beating as Beijing introduced a slew of new regulation over the past year in areas from data privacy to anti-trust that caught many investors off guard.

Cloud Village runs NetEase’s music streaming business and the company says it has 185 million monthly active users.

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

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

“Despite a continued increase in its user base, Cloud Village may continue to incur gross and net losses and net operating cash outflow in the foreseeable future, including for the year ending December 31, 2021, due to its continued investments in content, technologies, 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 China’s gaming giants and has been looking to grow internationally through high-profile games including “Lord of the Rings” and “Harry Potter” titles.