In "The Big Bank," Citigroup lowers Zhihu's target price to 5.2 yuan, with third-quarter performance meeting expectations

Citi published a report stating that Zhihu-W (02390.HK) achieved third-quarter results in line with expectations for 2025. Total revenue continued to decline, down 22% year-on-year to RMB 659 million (same below), which is 1% lower than the bank's forecast. Marketing service revenue decreased by 26% year-on-year to RMB 189 million, and membership revenue also fell by 16% year-on-year to RMB 386 million.

In this quarter, Zhihu continued to incur losses, mainly due to the ongoing weakness in its high-margin advertising business and persistently high marketing expenses, with a sales and marketing cost ratio reaching 50%. The bank expects revenue pressure to continue until 2026, with a year-on-year decline maintaining double digits. It remains cautious about the company's prospects, noting that the current stock price is below its net cash level.

The bank has lowered its revenue forecasts for Zhihu for the fiscal years 2026 and 2027 by 14% and 15%, respectively, with the target price reduced from HKD 6 to HKD 5.2. It maintains an "Outperform" rating