For investors, the central question is whether Meitu's AI-driven imaging products and subscription-based model can sustain stable growth, forming the key anchor for assessing its investment potential.
With Bitcoin breaking through the $100,000 mark, Meitu made headlines by divesting all of its cryptocurrency holdings.
In an announcement on the evening of December 4, Meitu revealed it had sold all its cryptocurrency assets, realizing a profit of approximately 571 million Chinese yuan. The company plans to use 80% of these proceeds to pay a special dividend. Meitu emphasized that, from this point forward, it will focus more intensely on its imaging and design product business.
Morgan Stanley described this move as a turning point for Meitu's standing in the capital markets and its image among investors.
Previously, Meitu was often viewed as a crypto-related stock, with its share price fluctuating alongside the volatile cryptocurrency market. However, a segment of investors consistently believed that Meitu was in a phase of comprehensive strategic adjustment. They argued that cryptocurrency was merely an experiment and that the company would eventually exit crypto to refocus on its core business.
Meitu's decision to divest fully from cryptocurrency suggests this second perspective has prevailed.
By abandoning the "vast potential" of cryptocurrency to concentrate on AI applications, will Meitu remain attractive to capital markets? In other words, what value does Meitu still hold?
Why Focus on AI Applications?
The year 2025 is anticipated to be a breakout year for AI applications. The ripple effects from AppLovin's success have signaled to global secondary markets that while the explosion of native AI applications might not have arrived yet, the commercial value of AI is already evident.
In 2024, the arms race in large AI models intensified, raising expectations for AI implementation across the industry. "The hype around ChatGPT and native AI apps made everyone believe we could create revolutionary super-apps," confessed one AI industry insider, noting the widespread "anxiety for a blockbuster" within the sector.
Amid the surging AI wave, large models have evolved from search and dialogue to video generation and mathematical reasoning. However, the expected explosion of native AI applications has not materialized. This year, products like Doubao and Kimi were aggressively promoted, but data indicates that even these leading applications have yet to reach the status of super-apps.
Why is it so difficult for native AI applications to become blockbusters? Robin Li, founder of Baidu, offered a perspective: in the AI era, applications that are "super capable" are more important than those solely focused on DAU (Daily Active Users), or "super apps." Looking at products from the mobile internet era—WeChat, Taobao, Douyin, and Xiaohongshu—their success universally stemmed from being broadly useful, whether for socializing, shopping, or entertainment. Current native AI applications, however, are still in the phase of attracting early adopters. The chasm they need to cross is precisely the one described by Geoffrey Moore in Crossing the Chasm: the gap between "early adopters" and the "early majority."
Of course, AI technology is transforming various industries. Beyond the core battleground of large models, many companies are exploring new boundaries using AI as an engine. Firms with existing products and user bases have taken the first steps toward commercialization by integrating AI technologies and features. Data from October on global AI product active users on APP platforms showed that besides ChatGPT, other products with stable monthly active users (MAU) exceeding 100 million include CapCut, Canva, and Meitu—all established leading functional products in their respective fields.
AppLovin's success was not accidental. The company operates in advertising, game publishing, and application development tools—businesses characterized by high profit margins and strong cash flow. Driven by AI, its advertising monetization rates improved significantly, leading to notable revenue growth. In Q3 2024, AppLovin's revenue reached nearly $1.2 billion, a 39% year-over-year increase, with a net profit of $434 million, surging 300%. Following the earnings report, its stock price soared, and its market cap briefly surpassed the $100 billion mark; its year-to-date increase exceeded 900%, far outpacing even U.S. AI computing giant NVIDIA.
This catalyzed the secondary market, further highlighting the Hong Kong stock market's attributes as a value洼地 (value洼地), and AI application concept stocks rebounded sharply.
Beyond the short-term stock price surge, what deserves more attention is the expansion of cognitive boundaries for AI applications. More companies with clear application scenarios and profitable business models have entered investors'视野 (field of view). These entities are "usable" and "profitable" in the present, making them more attractive as investments.
For instance, in the to-B AI application space, 4Paradigm is regarded as a representative of decision-making AI. Its proprietary AI platform delivers artificial intelligence solutions for enterprises, developing industry-specific large models for areas like academic translation, health management, and water and electricity management.
On the to-C front, Meitu holds a significant advantage. In the imaging and design赛道 (sector), through products like Meitu Pic, Wink, Meitu Design Studio, and Kaipai, it has率先 (taken the lead in) building an AI product matrix covering both lifestyle and productivity scenarios. The company has fully transitioned to a paid subscription-based business model, already achieving scaled profitability, and is considered to have substantial long-term value potential.
What Drives Meitu's Growth?
Looking back at Meitu's growth logic over the past three years (2022-2024), it can be summarized in three points: choosing a differentiated AI path, focusing on application products in its优势赛道 (core sectors), and establishing a highly sustainable business model.
First, consider Meitu's chosen AI path.
In June 2023, Meitu released its self-developed MiracleVision large model. Unlike other AI players, Meitu clearly stated from the outset that it would not compete in the general large model arena but would instead position itself as an AI application company. The development and iteration of its large model are intended to polish the technological foundation for its imaging and design products.
Regarding technical capability, Meitu maintains an open attitude. While core technologies come from its self-developed large model, it also acquires model capabilities through procurement and open-source solutions as needed. This approach prevents Meitu from being trapped by limitless pre-training investments, keeps costs controllable, and provides sufficient room to balance R&D investment with profit, ensuring healthy cash flow.
In reality, compared to large model technical capability, Meitu's true moat lies in its product基因 (DNA) and product capability.
Meitu started with applications. With 16 years in the imaging app赛道 (sector), it has created a series of flagship products like Meitu Pic and Meiyan Camera, accumulating a massive user base. This serves as a natural traffic entry point for AI features. On one hand, products like Meitu Pic can themselves evolve into AI applications—users can currently experience features like AI portraits, AI removal, AI painting, and AI image expansion on Meitu Pic. On the other hand, these established apps embed features from newer AI products like Meitu Design Studio and Wink, precisely directing垂直 (vertical) users with specific needs to these independent applications. This significantly reduces the customer acquisition cost and time for innovative apps.
Beyond a mature product foundation, the ability to define products, rapidly engineer, and iterate is key to Meitu's success in building an AI product matrix.
Long-term observation of Meitu's product iterations and launches reveals that its new products are born from tracking user needs and pain points. Meitu Design Studio originated from a poster feature within Meitu Pic. Recognizing users' strong demand for e-commerce design, it was quickly spun off into an independent innovative product, offering functions like AI product images, AI models, and AI retouching to solve material shooting and design problems for e-commerce merchants. Kaipai evolved from the提词器 (teleprompter) feature in Meiyan Camera. Meitu's product managers ultimately developed it into a productivity tool focused on the oral video presentation scenario.
These examples illustrate that applications capable of truly implementing AI落地 (AI落地) succeed not necessarily because of superior technology, but based on whether users like them, find them easy to use, and are willing to pay for them.
Previously, the majority of Meitu's revenue came from advertising. After enhancing its product power with AI, Meitu naturally transitioned its business model toward paid subscriptions. This is the primary monetization model for AI applications on the market and is currently recognized as one of the most stable and growth-oriented business models.
Therefore, to gauge the success of Meitu's AI applications, a practical metric is paid penetration rate—a more critical growth driver and key indicator than monthly active users. As of June 2024, the paid penetration rate for Meitu's products was 4.2%. The imaging and design product business, primarily driven by paid subscriptions, accounted for over half of the revenue in the first half of the year, making it Meitu's largest current revenue source. Yan Jinliang, Meitu's CFO, has publicly stated that Meitu's paid penetration rate still has room to grow by 2-3 times.
In an industry where change is constant, Meitu, having successfully implemented the paid subscription model, can be seen as a model of AI pragmatism. It has found the right entry point in a hot industry,叠加 (overlaid) new technology onto traditional strengths, and validated the feasibility of its business model through profitability and growth.
What Other Value Does Meitu Offer?
The critical point for investors is whether Meitu's AI-driven imaging products and subscription model can maintain stable growth in the foreseeable future, serving as the key anchor for judging its investment value.
From a profitability perspective, a business primarily based on paid subscriptions can achieve revenue growth as long as its features and user experience continuously meet customer needs. Furthermore, the marginal cost of applications is low, and high gross margins lead to high net profits. Morgan Stanley's research predicts that Meitu's gross margin will increase from 61% in 2023 to 67% by 2026, with a revenue compound annual growth rate (CAGR) of 20%. By 2026, its paid penetration rate is expected to reach 6.8%. CITIC Securities holds a similar view, believing the logic of AI driving Meitu's paid rate is continuously being verified.
For Meitu, while the paid subscription rate for flagship products like Meitu Pic can continue to increase, perhaps the larger incremental space lies in the productivity tools the company has been developing over the past two years and its overseas market expansion.
Currently, Meitu's productivity tools primarily target small to medium-sized business (SMB) users. Meitu continues to employ a strategy similar to that used for Meitu Pic: targeting non-professionals such as e-commerce merchants, self-media bloggers, and short video creators. These users leverage Meitu's tools to enhance efficiency and generate income. Judging by willingness to pay, payment amount, and payment habits, the market size for productivity scenarios far exceeds that of lifestyle scenarios. This is evident from the annual recurring revenue (ARR) of major global productivity tool companies—for example, Figma at approximately $600 million, Canva nearing $2 billion, and Adobe exceeding $19 billion.
The combination of productivity tools and expansion overseas is an evident part of Meitu's product strategy. Various overseas expansion rankings in recent years have proven that tool-based products are the easiest to globalize, and overseas users generally have better habits regarding paid subscriptions.
Meitu disclosed in a recent investor event that over the past six months, it has established offices in the United States, Australia, and other locations, hiring overseas staff. It has also set up a visual design business center in London.
Some investors worry that AI products in the imaging and design赛道 (sector) do not possess high technological barriers. They fear Meitu could lose users and market share to competing products launched by major Chinese internet firms or overseas peers. This is indeed a risk. However, a study of Meitu's history shows that similar challenges have never been crippling. Despite competition from ByteDance, Meitu Pic remains the industry leader, holding nearly 60% market share—the best testament to its resilience.
For investors, return on investment is the most practical concern. Comprehensive rankings and third-party data from the second half of this year indicate that the paid revenue for several of Meitu's core products continues to grow, with Wink, Meitu Design Studio, and Kaipai particularly exceeding growth expectations. This performance will likely be reflected in the company's 2024 annual report, scheduled for release next March.
Considering the company's high certainty, growth potential, leading advantage in its vertical sector, and growth space in the global market, Meitu currently stands as one of the few high-quality stocks in the AI application field within the performance-driven Hong Kong stock market.
Objectively speaking, within the AI application sector, Meitu's stock price remains in a value洼地 (value洼地), with relatively low valuation—even showing a gap from the target prices set by various brokerages. With improvements in Hong Kong stock market liquidity and the超预期 (super-expected) development of AI applications, Meitu's reasonable valuation is expected to rise further, making its potential for future value realization worth anticipating.
Frequently Asked Questions
What prompted Meitu to sell all its cryptocurrency holdings?
Meitu sold its cryptocurrency assets, realizing a significant profit, as part of a strategic shift to focus exclusively on its core imaging and design product business. The company stated this move allows it to concentrate resources on AI-driven applications and its subscription model, which is seen as having more stable long-term growth potential.
How does Meitu's AI strategy differ from other companies?
Unlike companies focused on developing general-purpose large language models, Meitu positions itself as an AI application company. It develops and utilizes AI, including its own MiracleVision model, primarily to enhance its existing suite of imaging and design products, aiming for practical implementation and user-paid subscriptions rather than competing in foundational model research.
What is Meitu's main source of revenue now?
Meitu's primary revenue source is now its Imaging & Design Product segment, which is largely driven by paid subscriptions. This shift marks a move away from previous reliance on advertising revenue. The company believes the subscription model offers higher stability and growth potential.
What are the growth drivers for Meitu looking forward?
Key growth drivers include increasing the paid subscriber penetration rate for its existing apps like Meitu Pic, expanding its newer productivity-focused tools (e.g., Meitu Design Studio, Wink, Kaipai) among SMB users, and pursuing strategic expansion into international markets where user willingness to pay for subscription tools is often higher.
Does Meitu face significant competition in its core markets?
Yes, the imaging and design app space is competitive. However, Meitu believes its deep understanding of user needs, strong product iteration capabilities, and established brand loyalty provide a defensive moat. Its historical resilience, like maintaining market share leadership against large competitors, supports this view.
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