Xiaohongshu Expects $3 Billion in Profit as it Prepares for Potential IPO

Xiaohongshu Technology Co. is on track to triple its profit to $3 billion in 2024, surpassing Pinterest and Snap's earnings. The Shanghai-based startup has 300 million monthly active users and a valuation of $31 billion, making it one of the few privately held leading Chinese internet names. Xiaohongshu has expanded its e-commerce offerings via tie-ups with Alibaba and JD.com and has doubled profits to over $1 billion in 2023.

Xiaohongshu Technology Co., a leading social media and e-commerce platform, is poised to triple its profit to $3 billion in 2024. This significant milestone underscores the company's robust growth and strategic positioning in the competitive digital landscape. With a valuation of $31 billion, Xiaohongshu has become one of the few privately held leading Chinese internet names, reflecting investor confidence in its potential.

Founded in 2013, Xiaohongshu has evolved from a shopping guide for Chinese tourists to a go-to platform for travel reviews and lifestyle tips. The company's eponymous app, also known as RedNote outside China, boasts 300 million monthly active users. This user base has been instrumental in driving the company's growth, particularly through its expansion into e-commerce offerings.

Xiaohongshu has expanded its e-commerce capabilities through strategic partnerships with Alibaba Group Holding Ltd. and JD.com Inc. These collaborations have allowed the company to leverage the extensive infrastructure and customer base of these major e-commerce players. The integration of social media with e-commerce has positioned Xiaohongshu as a leader in China's cross-border e-commerce market, which is projected to reach $391.9 billion by 2033 [1].

The company's recent financial performance has been impressive. Xiaohongshu doubled its profits to over $1 billion in 2023, demonstrating its ability to generate significant revenue despite the challenges posed by the competitive digital landscape. The company's focus on user-generated content (UGC) and peer recommendations has been a key driver of its success, particularly in categories like beauty, fashion, and wellness [2].

Xiaohongshu's strategic innovations, such as the Chengfeng integrated e-commerce marketing platform and AI-powered features like AR try-ons and personalized content recommendations, have further enhanced user engagement and conversion rates. These innovations have positioned Xiaohongshu as a leader in the social commerce revolution, where content and commerce are seamlessly integrated [3].

While Xiaohongshu's growth in China has been impressive, its expansion into the U.S. market has been more challenging. The company has faced volatility in user growth, with a surge in daily active users during the temporary TikTok ban followed by a decline to 800,000 as of March 2025. However, the company's unique value proposition of authentic content and a community-driven shopping experience remains a draw for niche audiences, particularly the Chinese diaspora [3].

Investors are weighing the risks and rewards of Xiaohongshu's growth. The company's valuation and growth metrics are enticing, but the U.S. market's regulatory complexity and competition from established players like Amazon and TikTok pose significant challenges. Moreover, sustaining user retention in Western markets remains a hurdle. However, the potential rewards are substantial, with Xiaohongshu well-positioned to capitalize on the $210.5 billion U.S. cross-border e-commerce market [3].

In conclusion, Xiaohongshu Technology Co.'s surging valuation and impressive growth reflect its dominance in China and ambitious global expansion. While the U.S. market presents operational and regulatory challenges, the company's trust-driven model, AI innovations, and strategic diversification make it a compelling investment for those willing to navigate the risks.

References:
[1] https://www.bloomberg.com/news/articles/2025-09-05/tiktok-rival-xiaohongshu-expects-profit-to-triple-to-3-billion
[2] https://www.scmp.com/business/article/3324261/value-instagram-style-xiaohongshu-soars-19-3-months-us31-billion-gsrs-books
[3] https://www.ainvest.com/news/xiaohongshu-surging-valuation-strategic-position-social-commerce-revolution-2509/