Shares of Kingsoft Cloud (NASDAQ:KC) stock have taken off today, up more than 74%. Kingsoft operates as the “largest independent cloud service provider in China.” Its cloud platform offers several services, such as infrastructure and industry-specific solutions.
Lately, Kingsoft has seen a dramatic decrease in its stock price in the face of strict Chinese regulations, delisting fears and analyst downgrades. Furthermore, KC stock is still down more than 70% from its initial public offering (IPO) in 2020. So, what exactly explains its turnaround today?
Here’s what investors should know about Kingsoft Cloud and its shares moving forward.
Why Is KC Stock Up Today?
Today, the People’s Bank of China (PBOC) announced that it would support overseas stock listings and ease regulations on Chinese tech companies “as soon as possible.” Investors were worried that Kingsoft could potentially be delisted, which caused mass selling in KC stock. Before today, Kingsoft had lost around 80% of its market capitalization since the start of 2022. Now, with the PBOC easing concerns, investors have flooded back into Chinese stocks.
This announcement comes one day after Kingsoft announced it would seek a dual listing in Hong Kong. It had stated that a dual listing would “provide shareholders with greater liquidity and protection amid an evolving market and regulatory environment.”
However, there is still a chance for Kingsoft to be delisted under the Holding Foreign Companies Accountable Act (HFCAA). The HFCAA states that Chinese companies must submit financial statements to U.S. auditors. If no financial statements are received for three consecutive years, violating companies could be delisted.
Last week, the U.S. Securities and Exchange Commission (SEC) notified five Chinese companies that they were in violation of the HFCAA. Fortunately for investors, Kingsoft was not on that list.
Who’s Betting Big on Kingsoft Cloud?
Generally speaking, investors can gain a better sense of how institutional investors view a company by looking at overall institutional ownership. So, without further ado, here are the top five shareholders of Kingsoft as of the fourth quarter of 2021:
- First Trust Advisors has 13.7 million shares or 5.68% ownership.
- Canada Pension Plan Investment Board has 10.9 million shares or 4.52% ownership.
- Baillie Gifford has 6.7 million shares or 2.76% ownership.
- IDG-Accel China Capital has 4.9 million shares or 2.05% ownership.
- Carmignac Gestion has 4.5 million shares or 1.87% ownership.
Out of the top five shareholders, Baillie Gifford and First Trust increased their positions during Q4. However, these two funds are sitting on a Q4 loss, as Kingsoft traded between $27.90 and $15.75 during the period. KC currently trades in the $5 range.
Overall, Kingsoft saw its institutional ownership increase by 4.37% during Q4. However, 124 funds now own KC stock as opposed to 130 in Q3.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
