As American social media users brace for the Jan. 19 TikTok ban, thousands have begun searching for alternative apps to satiate their doom scrolling fix. While many American-based tech CEO’s such as Mark Zuckerberg had hoped that the TikTok ban would encourage users to flock to other short-form video players such as Instagram or YouTube Shorts, it seems that the masses have stumbled onto an unknown gem called Xiaohongshu instead. The app, which translates to RedNote in English, is owned by a Shanghai-based company known as Xingyin Information Technology, and touts itself as a lifestyle, social networking and e-commerce service. Given that RedNote primarily serves a Chinese audience, it defaults to Mandarin upon download, and exposes new users to an audience of hundreds of millions of overseas subscribers.
The sudden influx of so-called “TikTok refugees” has caused RedNote to skyrocket in popularity, taking it to the number one position among the free apps chart on both the Apple App Store and the Google Play Store. As recently as last year, the platform was clocking in at number 162 on the same charts. Though RedNote is owned by a private entity, and therefore does not have its own share on the stock market, we can get a good idea of how well the app is performing by examining a few backdoor investors. Xingyin Information Technology partnered with a small handful of private corporations to fund the early development of RedNote before the app exploded in popularity, allowing us to see the fruits of the its labor in the market value spike of these entities. So, let’s take a moment to examine what exactly RedNote is, how its new users are changing the social media landscape and the financial projections behind the app’s development.
What Is RedNote?
Due to current events, many social media users are laboring under the delusion that RedNote is a TikTok rip-off, or that the app functions in the same way as the soon-to-be banned service. In reality, RedNote is really more like a mix between Instagram and Pinterest. The opening layout of the app shows several posts at the same time, and allows users to choose from a variety of aesthetics, shopping guides and group chats. There are a number of short-form videos posted on the app, though that isn’t the main focus of RedNote. This app allows significantly more person-to-person interaction and even offers users the ability to call each other on the phone, or purchase items directly from their followers, almost like Facebook Marketplace.
This focus on e-commerce is a foundational principle of the app, as RedNote originally launched under the title Hong Kong Shopping Guide back in 2013. While the app has increasingly taken on new social elements, one of the core features of RedNote is the ability to list and purchase random secondhand items. Furthermore, one of the most interesting details about the app’s subscriber base is its massive population of female users, which account for nearly 80 percent of all downloaders at the time of this writing. Since RedNote is currently a female-centric space, users tend to see less misogyny and violent content on the app than its many U.S.-based competitors.
How Does The App Differ From TikTok?
Though there are many upsides to the app, RedNote is significantly more censored than the traditional American social media experience, as users must adhere to a strict content policy in order to avoid being banned or limited by the app. Native Chinese users have been teaching Americans about their culture and censorship policies with a number of helpful posts. These include suggestions against explicitly referencing the LGBTQ+ community in your posts, as well as those covering controversial current events such as labor strikes, self-harm and suicide or critiques of the Chinese government.
Despite some of the cultural drawbacks presented by the app, American users seem to be loving it, as RedNote helps them connect directly with people from an unfamiliar culture. Numerous users have reportedly been using the app to make friends with Chinese citizens and have even begun sharing language learning tips along the way. Duolingo weighed in on the popularity of RedNote by sharing a post on their official X account, which highlights the sharp uptick in U.S. users taking up Mandarin courses. Per the language learning service, this demographic has seen a staggering 216 percent increase over the number from last year.
Who Owns RedNote?
Like TikTok, RedNote is a Chinese-owned company, which leaves the app open to the same kinds of alleged security issues responsible for getting the former booted off of American devices. Many have viewed the mass migration of TikTok users as a deliberate protest of the American government’s decision to ban the app, as RedNote is arguably more Chinese-centric than its spiritual predecessor. For starters, TikTok isn’t even available in China, as its parent company ByteDance owns and operates another app entirely devoted to serving that region. Those searching for the RedNote app may be confused to find that the program doesn’t even offer an English-language icon, as Xingyin Information Technology likely had no real intention of pivoting so heavily into the American market.
Charlwin Mao Wenchao is listed as the CEO and co-founder of the company, and touts an estimated net worth of $1.3 billion USD per Forbes. Though Wenchao is responsible for overseeing the big picture developments of RedNote, the app is funded by a series of big name investors, including a number of private hedge funds. Obviously, the question of whether RedNote is safe for U.S. users has led to a discussion about the app’s viability in the market moving forward, with some lawmakers already calling for a blanket ban on this and other Chinese-owned social media services. For now, there’s no way of knowing whether RedNote will become the next major social media service to replace TikTok, or the next to follow in TikTok’s path toward being banned.
RedNote App Stock
As stated, RedNote does not directly trade via public shares. Still, there are several backdoor investment opportunities that provide the market with a good understanding of the app’s meteoric growth. Two of the largest financial backers behind the app are e-commerce giant Alibaba and Chinese tech conglomerate Tencent. Both powerhouses of modern industry are publicly traded entities, meaning both firms are expected to see significant spikes in their stock pricing in the coming days. The companies each joined forces with Xingyin to support RedNote back in June 2018. Tencent doubled down and offered a $500 million second round of funding just a few years after their initial agreement. If RedNote continues to see meteoric growth in the coming months, it’s possible that Xingyin may express interest in going public, though it’s tough to say if its largest backers will have any interest in splitting their ownership stakes.
As of this writing, Alibaba (or BABA, on the New York Stock Exchange) is idling at a share price of $82.34. The massive ripple effect from RedNote may note have caused an immediate seismic shift for the e-commerce leader just yet, though it doesn’t take an expert analyst to see that the numbers are growing. For a more immediate look into RedNote’s success, be sure to check out Tencent’s figures (TCEHY on the NYSE). The multimedia giant has seen steady growth over the past 5 days, growing its share price by roughly a dollar each daily. At the time of this writing, it’s clocking in at $49 per share. To put these figures into perspective, NVIDIA Corporation (NVDA) was closing at $56.38 this time last year, and is currently listed at $133.57. If RedNote continues to grow as rapidly as TikTok, we could see a similar spike in shares for both of these founding entities.
