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Kingsoft Cloud Holdings Ltd. (KC) Stock Plunging in Premarket, Here’s the Reason

Kingsoft Cloud Holdings Ltd. (KC), a company providing cloud services to different businesses and organizations, gained an increase of 1.62% during Thursday’s regular trading session to close the day at $6.27. In the premarket, KC stock has slumped 6.22% and consequently was trading at $5.88 when last checked. The stock started to decline following the announcement of below-par financial results.

Q4 & FY 2021 Results

On Thursday, after the closure of the market, KC announced the results for Q4 and FY 2021. The company generated $417.4 million in terms of revenue during the quarter, an increase of 38.3% on a year-over-year basis. The net loss suffered during Q4 2021 was $75.7 million (or $0.02 per share) versus the net loss of $16.54 million (or $0.0047 per share) during the same quarter of the preceding year. During the fiscal year 2021, the net revenue stood at $1.42 billion, an increase of 37.8% on a year-over-year basis. The net loss suffered during the fiscal was $249.8 million (or $0.07 per share) compared to a net loss of $151.2 million (or $0.064 per share) during fiscal 2020.

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Q1 2022 Outlook

KC also announced the business outlook for Q1 2022. The company expects the total revenue to remain in the range of $320 to $340 million during the quarter. The gross billings from CDN services are expected to decline by 20% to 25%, while the core cloud services are expected to increase by 49% to 55%. The adjusted gross margin and EBITDA is during Q1 2022 is expected to remain better as compared to Q4 2021.

Comments from KC CEO

Mr Yulin Wang, Chief Executive Officer of KC, while commenting on the results said that the company has generated strong revenue during the quarter. The company had conducted a timely strategic review of its business as well as undertook several other strategic initiatives as well to adapt to challenging circumstances. These strategic initiatives would facilitate obtaining sustained growth.

What’s in Store for KC?

Looking ahead, analysts are of the view that KC stock holds several negative signals at the moment. Hence, it is expected to perform weakly in the next couple of weeks. Therefore, analysts are holding a negative evaluation of KC stock.


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