TikTok rival Xiaohongshu expects profit to triple to $3 billion

TikTok rival Xiaohongshu expects profit to triple to $3 billion

In a significant development, Xiaohongshu, a leading social commerce platform, has set its sights on tripling its profits to reach $3 billion by 2025. The company's ambitious goal underscores its strategic positioning in the evolving e-commerce landscape, particularly in China and the United States.

Xiaohongshu's impressive growth trajectory is driven by its innovative approach to social commerce, blending social media, user-generated content (UGC), and e-commerce into a seamless ecosystem. The platform's ability to leverage trust-based recommendations has been a key factor in its success, particularly in the beauty and fashion sectors where authenticity is paramount [2].

As of 2025, Xiaohongshu commands a valuation of $20 billion, driven by a 30% year-over-year revenue surge to $4.8 billion in 2024. With 300 million monthly active users and a 21.4% conversion rate for global brands, Xiaohongshu's user base continues to grow, with 75% of its users being young, urban women aged 18-34 [2].

The company's strategic partnerships with major e-commerce platforms such as Taobao, Tmall, and JD.com have further solidified its infrastructure, enabling seamless cross-platform transactions. Xiaohongshu's integration of social interaction and online shopping has positioned it as a leader in China's cross-border e-commerce market, which is projected to reach $391.9 billion by 2033 [2].

Xiaohongshu's expansion into the U.S. market has been marked by both challenges and opportunities. While the platform has seen a surge in daily active users in the U.S. following the temporary TikTok ban, it has since declined to 800,000 as of March 2025 [2]. However, Xiaohongshu's unique value proposition—authentic content and a user-centric approach—offers a promising pathway for growth in the U.S. market.

Investors are closely monitoring Xiaohongshu's ability to navigate regulatory hurdles and compete with established players like Amazon and TikTok. The company's strategic AI innovations, including its Chengfeng platform and AR try-ons, as well as its diversification into wellness and travel sectors, aim to strengthen its 60% ad-driven revenue model [2].

Xiaohongshu's focus on recurring revenue models, expanding open access programs, and anticipated cost savings positions it well to achieve its ambitious profit targets. However, the company will need to demonstrate consistent progress towards margin improvement and effective execution of cost-cutting measures to meet investor expectations.

References:

[1] https://www.nasdaq.com/articles/wiley-posts-2-revenue-gain-fiscal-q1
[2] https://www.ainvest.com/news/xiaohongshu-surging-valuation-strategic-position-social-commerce-revolution-2509/