HONG KONG, Aug 24 (Reuters Breakingviews) - If something looks too good to be true, it probably is. China's Kuaishou Technology (1024.HK) has shed nearly $190 billion in market value from a peak struck shortly after its February listing. Its adjusted net loss is forecast to hit $2.8 billion this year, analysts at Morgan Stanley estimate, as it struggles with regulators and its far-larger rival ByteDance. Barring a turnaround, it may prove to be the Chinese tech sector's shortest-lived flash in the pan.

Kuaishou was the talk of the Hong Kong stock exchange six months ago. The viral-video app's initial public offering smashed records, attracting orders from mom-and-pop traders equivalent to 1,200 times the amount of shares on offer. The stock almost tripled on its first day of trading; by mid-February, the unprofitable company commanded a market capitalisation of over $220 billion, more than video-streaming peers Bilibili (9626.HK) and Hello Group (MOMO.O) combined.

How far the mighty have fallen. Today the company is worth $37 billion, largely thanks to a regulatory firestorm that ensnared internet titans from Alibaba (9988.HK) to Tencent (0700.HK), and provoked a massive market selloff. Last week watchdogs unveiled more draft rules targeting the live-streaming sector, barring anyone under 16 years old from marketing products plus directives for web influencers to “dress appropriately” and speak Mandarin. A separate data privacy law will likely restrict companies from collecting user information or using recommendation algorithms. State media are lambasting "low-brow content".

This all bodes ill for Kuaishou, which has been looking to e-commerce and advertising to monetise its massive user base. And Beijing might not be the biggest problem. In the second quarter, monthly and daily active users on Kuaishou's main apps fell slightly from the previous three-month period, according to analysts at Morgan Stanley, while ByteDance's competing Douyin app gained. The bank reckons Kuaishou had to spend a whopping $1.8 billion on sales and marketing expenses in the quarter, and hiked its full-year adjusted net loss forecast by more than a third.

Analysts’ mean price target has fallen from over HK$400 per share to roughly HK$250 today, according to Refinitiv. The lowest is at HK$75 - where the stock currently trades. Kuaishou, which must keep spending to fend off ByteDance, is fading quickly to obscurity.

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- Chinese video-streaming app Kuaishou Technology will report financial results in the three months to end-June on Aug. 25.

- The company is expected to make an adjusted net loss, excluding share-based compensation and other one-offs, of 4.8 billion yuan ($739 million) on revenue of 19 billion yuan in the period, analysts at Morgan Stanley estimate. Full-year adjusted net loss is forecast to be 18 billion yuan.

- Separately, China's Ministry of Commerce on Aug. 18 published detailed guidelines for the live-streaming market, including requirements that hosts speak Mandarin and dress appropriately when they market products online.

Editing by Pete Sweeney and Katrina Hamlin

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