| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 1.70 | -55 |
| Intrinsic value (DCF) | 4.65 | 23 |
| Graham-Dodd Method | 4.80 | 27 |
| Graham Formula | 1.40 | -63 |
Zhihu Inc. (NYSE: ZH) is a leading online content community in China, enabling users to seek knowledge, share insights, and engage in discussions across diverse topics. Founded in 2010 and headquartered in Beijing, Zhihu operates a Q&A platform that blends professional expertise with community-driven content, catering to over 100 million monthly active users. The company monetizes through advertising, paid memberships, and vocational training services, positioning itself as a hybrid of Quora and Reddit with a localized Chinese approach. Zhihu plays a critical role in China's digital content ecosystem, competing in the Internet Content & Information sector under Communication Services. Despite regulatory scrutiny in China’s tech sector, Zhihu maintains a strong niche in knowledge-sharing, supported by its audio-visual permits and IT service offerings. Its asset-light model and high user engagement make it a key player in China’s growing online education and information markets.
Zhihu presents a high-risk, high-reward investment case. Its niche in China’s knowledge-sharing space and strong user base (with 39.5 million average MAUs in Q3 2023) provide growth potential, particularly in monetization through ads and vocational training. However, the company remains unprofitable (net loss of ¥171.8M in FY2023) with negative operating cash flow (¥-280.2M), reflecting heavy investment in content moderation and user acquisition. A low beta (0.17) suggests limited correlation with broader markets, but regulatory risks in China’s tech sector persist. The stock may appeal to growth investors betting on China’s digital content consumption, but profitability concerns and competition from ByteDance (Douyin) and Baidu (BIDU) warrant caution.
Zhihu’s competitive advantage lies in its first-mover status as China’s premier Q&A platform, combining professional content with community engagement—a model distinct from social media or short-video rivals. Its curated content and upvoting system foster higher-quality discussions than Weibo (WB), while its focus on long-form content differentiates it from ByteDance’s Douyin. However, monetization lags behind competitors: Zhihu’s 2023 revenue (¥3.6B) is dwarfed by Bilibili’s (BILI) ¥22.5B, reflecting weaker gaming/live-streaming integration. Zhihu’s 2023 net margin (-47.7%) also underperforms Baidu’s 8.3%, highlighting inefficiencies in scaling paid memberships. The platform’s strength in STEM and professional topics provides defensibility against Douyin’s entertainment focus, but user time-spent remains lower than TikTok-like platforms. Regulatory risks are mitigated by Zhihu’s compliance-focused content moderation, though this increases operational costs. Strategic partnerships (e.g., with academic institutions) could enhance its knowledge-centric moat.