Summary of Key Points
Recently, Kimi has seen an exceptionally active financing pace and a surge in secondary stock trading: its valuation has skyrocketed from $4.3 billion at the end of last year to $50 billion in the Pre-IPO phase (a tenfold increase in just one year). The secondary market has become chaotic due to "scarcity" and "high expectations," with rampant rumors and instant selling of shares that are difficult to verify. As a result, the company had to clarify that any unauthorized secondary transactions are invalid. Institutions have mixed reactions to Kimi: some are aggressively pursuing higher valuations (fearing to miss out on a leading AI opportunity), while others have paused their investments due to concerns about the high valuation and the risks associated with converting the company into a red-chip structure.
After the open-sourcing of K3, industry confidence has increased, bringing new opportunities for both infrastructure and application layers.
I. Secondary Stock Trading: Gone Wild, Hard to Tell What's Real
Secondary stock trading refers to the sale of shares by early investors/employees to others in a company that has not yet gone public (essentially, buying in before it lists to profit from the potential price increase). Why are Kimi's secondary shares so popular?
- Reasons for the Popularity: Kimi's valuation has risen rapidly (from $10 billion to $50 billion in just half a year), prompting many to try to buy in at a low price. With a large number of shareholders and multiple funding rounds, the number of tradable shares is larger than that of DeepSeek, which has a more concentrated shareholder base and locked-up shares, making it seem more feasible to purchase shares.
- Chaos in the Market: Rumors are everywhere—some claim they have bought shares that will be listed; others try to verify these claims. The amount of available shares changes faster than the stock price. Transactions are highly uncertain; funds are ready, but agreements cannot be finalized, and even basic information is hard to confirm. The company had to clarify that all secondary transactions must be approved internally; otherwise, they are invalid.
II. A Tenfold Valuation Increase in One Year: Real Merit or Market Hype?
Kimi's valuation surge is not unfounded:
- Strong Product: The release of K3 caused a sensation in the market, even earning a mention from Elon Musk, and it was later used as a framework by the overseas product Cursor (an authorized collaboration), demonstrating its technical strength.
- Robust Commercialization: In the second quarter of 2026, Kimi's annual recurring revenue (ARR) doubled to $300 million. API sales account for 70% of its revenue, with international sales increasing by 400%, covering more than 200 countries—indicating strong profitability.
- Elite Investor Base: Leading VCs like Sequoia and IDG have invested, along with industry players such as Alibaba, Tencent, and Meituan, which bring valuable use cases (e-commerce, local services). National investors like the Social Security Fund and China Mobile have also joined in. The support from these influential entities has boosted market confidence.
However, there is also a component of market hype: the AI sector is highly competitive, and investors are willing to pay high valuations in hopes of future gains.
III. Institutions' Dilemma: Caught Between Fear of Missing Out and Concerns About Valuation
Institutions face a dilemma regarding Kimi's high valuation:
- Those Who Are Investing: Driven by FOMO (fear of missing out), they believe investing in Kimi now means securing a position in a leading AI company, often ignoring due diligence due to the urgency to invest.
- Those Who Are Not Investing: They are cautious, considering factors such as potential valuation reductions after listing (like what happened with Anthropic) and the risks associated with converting the company into a red-chip structure for a Hong Kong listing.
IV. K3 Open-Sourcing: More Than Just Hype—Real Benefits for the Industry
The open-sourcing of K3 has practical implications for the industry:
- Infrastructure Growth: Stronger models and open-source availability increase the demand for computing resources (modules, HBM, data centers), benefiting companies that provide hardware support for AI.
- Price Benchmark: Kimi has set a new standard for pricing APIs, proving that high-quality products can command higher prices and changing the industry's competitive landscape.
- Greater Opportunities for Applications: Open-source models lower the barriers for entrepreneurs, allowing them to develop applications based on K3 (e.g., intelligent customer service, content generation), expanding business possibilities.
In summary, Kimi's success reflects the fervor in the AI sector, but it also indicates a shift towards more rational decision-making among investors, who are now focusing on tangible opportunities rather than just chasing trends.