Kanzhun (BZ  ) went public in early June at $33 which was above its pre-IPO price of $19. Since then, shares have mostly traded and are about 7% above its opening price. This is impressive considering that many Chinese tech stocks and IPOs have been quite weak in the past couple of weeks as the government has taken a much tougher stance on regulating tech companies.

Many believe that Chinese authorities were alarmed by U.S. tech companies' power, which they flexed by banning President Donald Trump from platforms following the January 6th insurrection. China's recent moves seem to be about reducing the power of tech companies, and many fear that the structure used to list IPOs in foreign markets could be rescinded.

Kanzhun Profile

Kanzhun is known as Boss Zhipin in China and is an online recruitment platform. In its IPO, the company was able to raise $912 million from investors such as UB Asset Management and Tiger Global. Some of its prominent early backers include Tencent (TCEHY  ), NetEase (NTES  ), and Capital Today, a prominent Chinese venture capital firm.

Kanzhun is the largest online job site in China with 25 million monthly active users. The website attempts to connect job seekers directly to job hunters by using AI and analytics. Employers and prospective employees can chat on the platform with Kanzhun charging employers for placement, listings, and access to various features. In this regard, Kanzhun has some similarities with a recent IPO - ZipRecruiter (ZIP  ).

Kanzhun has been remarkably successful in terms of its metrics with users growing from 11.5 million in 2019 to 24.9 million in March. In Q1, the number of job seekers grew by 12%. Revenue increased by 95% in 2020 to $298 million with the bulk of it coming from enterprise customers who total 2.2 million. This growth continued in Q1 as revenue grew 179%.

Outlook

The company has more upside as it only has 1% market share of the total recruitment industry in China. Additionally, this total market should grow especially as recruitment continues to move online. Further, the company has an early-mover advantage in its particular niche of recruitment and should benefit from network effects.

The major known risk of Kanzhun is that its not yet profitable as it continues to invest in user growth and quite expensive. However, this risk is common with IPOs and growth stocks and tends to be intrinsic in high-reward opportunities. However, the unknown risk is whether the Chinese government will continue its crackdown on tech companies. They have specifically cited protecting user data as a priority, so it wouldn't be surprising if Kanzhun felt some effects of this. Additionally, some believe that there is some risk that all Chinese companies listed in the U.S. could be de-listed as a consequence of the heightened tensions between the two countries.