Qutoutiao Raises $100 Million for Free Lit App Midu
The stock in Qutoutiao inc. (Nasdaq: QTT) rose more than 2% Thursday on the announcement of raising $100 million for its free book app Midu.
Shanghai-based Qutoutiao, a mobile content aggregator, said in a statement after markets closed on Wednesday that its subsidiary has closed the Series B financing round. Leading the round was CMC Capital, with Qutoutiao participating, according to the statement.
"With its pioneering free-to-read model and dedicated execution capability, Midu has emerged as a leading player in the competitive online literature market with strong growth momentum," Peter Li, a partner at CMC Capital, said.
Founded in May 2018, Midu provides free-to-read online books via Midu Novels and Midu Novels Lite, generating revenue from ads.
"Midu continues to play a crucial part in Qutoutiao's overall content platform strategy," Siliang Tan, the chairman and chief executive officer of Qutoutiao, said in a statement on Wednesday.
In July, China's National Office Against Pornographic and Illegal Publications named Midu among distributors of pornography, as reported by China Daily, and forced the platform to "clean up the problematic content during the rectification period."
Midu called its rectification period a "product upgrade" in its press release and resumed regular activities on October 16 after three months.
According to Tan, the company aims to reach more than 10 million daily active users this year and grow to become the largest online literature platform in China by 2020.
Its parent company Qutoutiao said the number of its average monthly active users reached 119.3 million in the second quarter, up 250 percent year-over-year. Average daily active users reached 38.7 million, up 208 percent a year ago, according to its earnings report posted in September.
"Pioneering the free-to-read model, Midu expanded the addressable market by offering a solution to hundreds of millions of online literature lovers who had been previously excluded by the traditional paid-only business models," Tan said in a conference call in September.
Meanwhile, Midu's rival Sina Reading, operated by Sina Corp. (Nasdaq: SINA), reportedly downsized this week, reportedly cutting more than 90% of its staff, according to a Thursday post on Chinese social networking platform Maimai.
The stock in Qutoutiao closed on Thursday at $3.45 per American depositary share.
Sina's stock inched 27 cents lower to $41.32 per ADS.
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