Zhihu (ZH) AI Stock Analysis

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Zhihu

(NYSE:ZH)

53Neutral

Zhihu's overall stock score reflects a company in transition. Significant improvements in profitability and user engagement metrics are positive, yet financial struggles and valuation concerns weigh heavily. The mixed technical indicators add uncertainty, but strategic initiatives, especially in AI, offer potential upside.

Zhihu (ZH) vs. S&P 500 (SPY)

Market Cap

$345.19M

Dividend YieldN/A

Average Volume (3M)491.79K

Price to Earnings (P/E)―

Beta (1Y)0.84

Revenue Growth-15.62%

EPS Growth79.81%

CountryUS

Employees1,887

SectorCommunication Services

Sector Strength85

IndustryInternet Content & Information

Share Statistics

EPS (TTM)-0.24

Shares Outstanding83,041,560

10 Day Avg. Volume263,110

30 Day Avg. Volume491,790

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$5.10

Price Target Upside32.12% Upside

Rating ConsensusHold

Number of Analyst Covering0

Zhihu Business Overview & Revenue Model

Company DescriptionZhihu Inc. operates an online content community in the People's Republic of China. Its community allows people to seek inspiration, find solutions, make decisions, and have fun. The company also offers technology, business support, and consulting services; information transmission, software, and information technology services; information and marketing services; vocational training; and internet services, as well as holds audio-visual permit. The company was founded in 2010 and is headquartered in Beijing, the People's Republic of China.

How the Company Makes MoneyZhihu primarily generates revenue through a diversified business model that includes advertising, membership subscriptions, content-commerce solutions, and e-commerce. Advertising revenue comes from display ads, native ads, and content marketing services offered to businesses looking to reach Zhihu's engaged audience. The membership subscription model offers users premium services such as exclusive content, enhanced features, and ad-free experiences. Zhihu also earns from content-commerce solutions, where it facilitates the sale of products and services related to the content on its platform, earning a commission. Additionally, the company has partnerships with educational institutions and businesses to offer online courses and professional development resources, further contributing to its revenue.

Zhihu Financial Statement Overview

Summary

Zhihu shows growth potential with increasing revenues, but profitability remains a concern with persistent negative margins. The balance sheet is strong in terms of equity, providing a cushion against financial volatility. However, negative operating and free cash flows highlight the need for improved cash management and operational efficiency.

Income Statement

Neutral

Zhihu's revenue has shown positive growth over the years, with a notable increase from 2022 to 2023. However, the company continues to experience negative EBIT and net profit margins, reflecting ongoing profitability challenges. The gross profit margin is relatively stable, indicating effective cost management at the gross level.

Balance Sheet

Neutral

The balance sheet reflects a strong equity position, with a high equity ratio indicating financial stability. However, the company has high liabilities relative to its equity in earlier years, which has improved over time. The debt-to-equity ratio is low, suggesting limited leverage, which is a positive aspect.

Cash Flow

Negative

Cash flow from operations remains negative, indicating challenges in generating cash through core business activities. Free cash flow has improved slightly in recent years, but it is still negative. The operating cash flow to net income ratio suggests inefficiencies in converting revenue into cash.

Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
4.20B	3.60B	2.96B	1.35B	670.51M
	Gross Profit
2.30B	1.81B	1.55B	757.80M	312.27M
	EBIT
-1.07B	-1.60B	-1.39B	-602.88M	-1.06B
	EBITDA
-1.05B	-1.58B	-1.37B	-583.27M	-1.04B
	Net Income Common Stockholders
-843.64M	-1.58B	-1.30B	-517.55M	-1.00B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.46B	6.26B	7.21B	3.10B	3.54B
	Total Assets
6.80B	7.66B	8.81B	3.76B	3.98B
	Total Debt
45.73M	96.56M	40.52M	2.89M	25.64M
	Net Debt
-2.06B	-4.43B	-2.12B	-954.93M	-874.71M
	Total Liabilities
2.09B	1.96B	2.07B	1.01B	7.98B
	Stockholders Equity
4.60B	5.65B	6.74B	2.75B	-3.99B
Cash Flow		Free Cash Flow
-424.40M	-1.12B	-447.67M	-246.37M	-721.27M
	Operating Cash Flow
-415.53M	-1.11B	-440.23M	-244.42M	-715.52M
	Investing Cash Flow
-1.68B	3.49B	-3.14B	430.11M	-2.10B
	Financing Cash Flow
-365.06M	-108.35M	4.88B	9.29M	3.00B

Zhihu Technical Analysis

Technical Analysis Sentiment

Positive

Last Price3.86

Price Trends

50DMA

4.52

Negative

100DMA

4.12

Negative

200DMA

3.79

Positive

Market Momentum

MACD

-0.12

Negative

RSI

48.51

Neutral

STOCH

77.60

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZH, the sentiment is Positive. The current price of 3.86 is above the 20-day moving average (MA) of 3.76, below the 50-day MA of 4.52, and above the 200-day MA of 3.79, indicating a neutral trend. The MACD of -0.12 indicates Negative momentum. The RSI at 48.51 is Neutral, neither overbought nor oversold. The STOCH value of 77.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ZH.

Zhihu Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EVER	81 Outperform	$858.36M	27.27	29.75%	―	73.72%	―
OPRA	80 Outperform	$1.54B	23.31	9.18%	4.57%	26.71%	-23.67%
FVRR	73 Outperform	$937.95M	55.43	5.08%	―	8.33%	436.49%
WB	61 Neutral	$2.03B	6.96	8.74%	9.88%	-0.29%	-12.84%
Sector *	59 Neutral	$13.50B	7.28	-2.06%	3.86%	2.39%	-36.82%
JOYY	55 Neutral	$2.13B	―	-2.96%	2.26%	-1.33%	-148.56%
ZH	53 Neutral	$345.19M	―	-3.92%	―	-15.62%	79.81%

* Communication Services Sector Average

Performance Comparison

Zhihu

3.96

-0.11

-2.70%

JOYY

40.85

7.86

23.83%

Weibo

8.10

-0.58

-6.68%

EVER

EverQuote

26.22

4.47

20.55%

OPRA

Opera

17.18

4.06

30.95%

FVRR

Fiverr International

26.12

5.13

24.44%

Zhihu Earnings Call Summary

Earnings Call Date:Mar 26, 2025

(Q4-2024)

% Change Since: -16.27%|

Next Earnings Date:May 21, 2025

Earnings Call Sentiment Positive

Despite a decline in total revenue and challenges in marketing services and vocational training, Zhihu marked a significant turnaround in profitability, reduced user acquisition costs, and achieved growth in engagement metrics. The company's strategic focus on AI integration and enhancing its community of experts contributed to a positive outlook.

Q4-2024 Updates

Positive Updates

Turnaround in Profitability

Zhihu reported its first-ever adjusted net income of RMB97.1 million, compared to an adjusted net loss of RMB91.3 million in the same period last year. Additionally, the company swung from an adjusted net operating loss of RMB165.3 million to an adjusted operating profit of RMB23.1 million.

Significant Reduction in User Acquisition Costs

Zhihu achieved an 88% year-over-year reduction in community user acquisition related expenses, contributing to its profitability.

Growth in Key Engagement Metrics

Time spent per DAU grew 23% year-over-year, and core user retention rates improved both sequentially and year-over-year. Average MAUs were 81.4 million, up 0.3% sequentially.

AI Integration and Community Enhancement

Zhihu's AI platform, Zhida, achieved over 10 million MAU and received positive feedback for response completeness and accuracy, highlighting its integration with the community of experts.

Expansion of Content and Creator Base

The cumulative content volume reached 874.6 million, an increase of 12.9% year-over-year, and the community of content creators grew to 77.7 million, up 8.9% year-over-year.

Strong Performance in Self-Operated Vocational Training

The self-operated vocational training business achieved a turnaround in operating profitability and double-digit growth year-over-year.

Negative Updates

Decline in Total Revenue

Total revenues for the fourth quarter were RMB859.2 million, compared to RMB1,138.3 million in the same period of 2023, reflecting a decrease of 24.5% due to strategic adjustments away from lower-quality revenue.

Decrease in Marketing Services Revenue

Marketing services revenue for the quarter was RMB315.9 million, compared to RMB465.2 million in the same period of 2023, reflecting a decrease due to the optimization of service offerings.

Vocational Training Revenue Decline

Revenue from vocational training decreased by 50.4% year-over-year to RMB84 million due to strategic refinement of acquired business.

Slight Decline in Paid Membership Revenue

Paid membership revenue was RMB420.2 million, compared to RMB455.9 million in the same period of 2023, with a slight year-over-year decrease in average monthly subscribing members.

Company Guidance

During the fourth quarter of 2024, Zhihu Inc. reported a significant financial turnaround, achieving an adjusted net income of RMB97.1 million, compared to an adjusted net loss of RMB91.3 million in the same period the previous year. The company also transitioned from an adjusted net operating loss of RMB165.3 million to an adjusted operating profit of RMB23.1 million. This improvement was driven by strategic decisions made at the start of 2024, which included a focus on enhancing user engagement and optimizing the community ecosystem. Key user engagement metrics showed growth, with time spent per daily active user increasing by 23% year-over-year, and average monthly active users reaching 81.4 million. Zhihu's revenue for the fourth quarter was RMB859.2 million, with paid membership and vocational training contributing over 62% of total revenues. The company also reported a 78.3% year-over-year increase in income-generating creators for paid members. Additionally, Zhihu's marketing services revenue was RMB315.9 million, and the company ended the year with cash and equivalents totaling RMB4.9 billion.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.