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China's Meitu banks on its popular beauty app in IPO

| Dec 21, 2016 07:43 AM EST

One of the apps provided by the company Meitu.

The company Meitu, whose apps and phones people use to beautify their digital appearances recently hit the headlines when it went public in an IPO on the  Hong Kong stock exchange.

Meitu just got valued at $4.6 billion all thanks to an IPO that was listed on the Hong Kong stock exchange, however the app maker's debut did not necessarily cause any ripples. Instead, when Meitu debuted it did not rise past its IPO price which turned out to be a muted reception, reported Bloomberg.

However, when Meitu first offered the IPO it was greeted with a lot of excitement by people who were hoping that Hong Kong would soon become a tech hub and see more such listings. Interestingly, when the shares were offered as part of the IPO each was priced in the range of HK$8.50-HK$9.60. Even though this was  at the bottom end of how much was expected for each share, the stock actually did not outperform.

Instead on the first day on the stock exchange it ended up being priced at HK$8.50 by the time trading closed, which was in inline with the base price. In spite of this muted kick off in the stock exchange, the  apps created by Meitu has a wide user base.

It is estimated that the main app offered by the company which goes by the name of MeituPic has over 456-million users in Asia and in China. The user base is also very invested in beautifying their pictures with the aid of the filters and tools that remove blemishes and other faults leaving behind picture perfect portraits.

Over 6 billon photos are retouched and posted online every month using MeituPic and other  apps created by Meitu, reported Fortune. It however appears that the big user base could not convince investors that the company was profitable. Most investors and analysts therefore ended up with an impression that the company was just a fad.

There is also an impression that the company 's apps are not its main strength and that is mainly makes most of its profit from its line of smartphones. This is one of the reasons that the stock failed to capture the attention of investors and analysts, who are looking at how the company will attract advertisers using its app which is currently used along the lines of a social networking tool.

Report on how Meitu could be worth billions

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