Soul suspends US IPO process, receives support from major shareholder Tencent

Author | Zhao Qinghui

Leifeng.com reported on the afternoon of June 23 that the social platform Soul released a statement today, announcing the suspension of the US stock IPO process.

The statement said that after careful consideration, Soul’s management has suspended the IPO pricing process, and major shareholder Tencent also supports this decision.

On May 11, 2021, Soul went public on the Nasdaq market in the United States with depositary receipts, with the stock trading code SSR. Morgan Stanley, Jefferies, Bank of America Securities and CICC served as underwriters. According to public information, Soul has issued 152 million tradable shares, including 116 million Class A common shares and 3,581.41 Class B shares. All Class B shares are held by the actual controller Zhang Lu, with a shareholding ratio of 84%. Well-known institutions such as Tencent, 5Y Capital, DST, GGV Capital, and Yuansheng Capital have joined the game.

On June 18, Soul submitted an updated IPO application to the SEC, setting the issue price range between US$13 and US$15 per American depositary share.

As a new social app for Generation Z, Soul's data performance in the past few years has been pretty good. In 2020, Soul's DAU increased by 79% year-on-year. In the first quarter of 2021, DAU increased again by 94%.

Behind the huge increase is a huge marketing investment. Soul's annual marketing expenses are in the hundreds of millions. According to public data: in 2019, 2020, and Q1 2021, SOUL's marketing expenses were 197 million yuan, 602 million yuan, and 460 million yuan, respectively, accounting for 278.1%, 120.9%, and 192.9% of its revenue, respectively.

Soul's prospectus shows that Soul's average monthly payment rate has not exceeded 5% in the past three years, and it has been difficult to generate revenue.

It is not yet known whether there are other plans for suspending the IPO process.

The following is the full statement:

Hello everyone!

Thank you for your continued support for Soul. As you all know, we are applying for an IPO in the United States, and the process is going very smoothly. In the process, we met strategic partners and investors who love us very much, and received support from many parties. We are very happy to receive very hot market feedback after updating the pricing range. During this process, the company also received the possibility of other capital operations. After careful consideration, the management has suspended the IPO pricing process. Our major shareholder Tencent also supports this decision.

Soul is currently operating normally and will usher in the expected growth. We will let more people use our products and pass on kindness, warmth and truth to more Soulers. Thank you again!

Soul Team

2021.6.23

This article is originally written by Leifeng.com, and the author is Zhao Qinghui. Please reply "reprint" to apply for authorization. Reprinting without authorization is prohibited.