The cryptocurrency landscape has been a hotbed of speculation, fervor, and financial volatility, and recently, it has also become a focal point for corporate decision-making. This was evidenced when Meitu, a prominent Chinese tech company known for its image processing applications, made headlines by liquidating its entire cryptocurrency portfolio, aligning with Bitcoin’s meteoric rise beyond the $100,000 mark. This strategic departure from cryptocurrency investments illustrates a significant shift in the company’s focus.

On December 4, Meitu announced that it had sold off all of its cryptocurrency holdings, yielding profits of approximately 571 million yuan (around $73 million). The company revealed its intention to allocate 80% of these proceeds as a special dividend to shareholders, indicating a deliberate effort to return value to investors. Moreover, in this announcement, Meitu underscored its commitment to refocusing on its core business—image and design products.

Morgan Stanley offered a notable interpretation of this pivot, labeling it a transformation in Meitu's standing within the capital market and altering investor perceptions of the company’s future prospects. Historically, Meitu was perceived as a stock associated with the fluctuations of the cryptocurrency market. Every surge or decline in crypto values seemed to have a direct effect on Meitu’s share price. However, with the company’s recent actions, some investors contend that Meitu has entered a phase of significant strategic recalibration, where its foray into cryptocurrency was merely an experimental venture that would ultimately yield to a return to its primary operations.

This recent liquidation raises an intriguing question: In an era where AI applications are mushrooming and transforming industries, can Meitu maintain its allure in the capital market? What future value can this tech company offer investors?

The burgeoning field of artificial intelligence (AI) applications appears to be Meitu’s new frontier. The year 2025 is widely anticipated to be a hallmark year for AI application proliferation. The remarkable growth of companies like AppLovin signals that while the full-scale explosion of AI-native applications may still be on the horizon, the commercial potential of AI is becoming ever clearer.

As 2024 approaches, a competitive arms race for AI large models escalates, with hopes and expectations proliferating on both sides of the industry. This was echoed by an AI professional, who remarked that the rise of ChatGPT has sparked anxiety regarding the creation of revolutionary “super applications.” Pertinently, despite much buzz around AI innovations, actual deployment of impactful AI native applications remains sporadic. Although newcomer products such as Doubao and Kimi have entered the market with visible fervor, they have yet to truly achieve super app status, highlighting the line between expectation and reality in the AI field.

The struggle to produce a breakout AI app brings to light critical concepts discussed by Baidu’s founder, Robin Li, who suggested that in this AI era, applications that are “super capable” may matter more than those that simply track daily active users. Drawing a parallel with the mobile internet era, successful apps such as WeChat, Taobao, Douyin, and Xiaohongshu found success through their universal utility across communication, shopping, or entertainment needs. Current AI native applications, however, are still in the phase of courting early adopters and striving to bridge the gap to a more mainstream audience—a phenomenon described in Jeffrey Moore’s “Crossing the Chasm.”

The continual evolution of AI technology does signal transformative potential across diverse sectors. Beyond the established giants wrestling at the core of the large model battles, myriad companies are exploring AI as a means to redefine their operational frontiers. Companies with existing product lines and user bases, when infused with AI capabilities, have begun showcasing promising commercial avenues, as demonstrated by a report highlighting that ChatGPT, along with products like CapCut and Canva, has seen stable monthly user numbers in the hundreds of millions; this is bolstered by their established features and market presence.

AppLovin’s robust performance exemplifies how turning towards AI can yield incredible returns. Primarily engaged in advertising, game distribution, and app development tools—which typically boast high margins—AppLovin has experienced a significant boost in ad monetization rates owing to AI, resulting in a notable revenue increase. For example, its Q3 2024 earnings reported nearly $1.2 billion, a 39% year-over-year jump, with net profits skyrocketing by 300%. The subsequent surge in its stock, which briefly surpassed a market capitalization of $100 billion, reflects the optimistic reception of AI applications in the market.

As the secondary market reacts, AI application stocks are buoying and rebounding robustly. However, beyond mere stock price increases, an exciting development is unfolding: the expansion of AI applications across various cognitive domains is becoming more pronounced. Newer companies with defined application scenarios and clear monetization strategies are capturing investor interest, primarily due to their current usability and profitable trajectories.

In the realm of business-to-business (B2B) AI applications, Fourth Paradigm is emerging as a noteworthy entity in decision-driven AI. Their platform, known as the Prophet AI platform, provides a suite of AI solutions across sectors like academic translation and health management, thereby establishing robust industry models.

On the consumer side, Meitu is strategically taking the lead in the image processing and design landscape. Through applications such as MeituXiuxiu, Wink, and Meitu Design Studio, the company has created an AI product ecosystem catering to various life scenarios and productivity needs. This has culminated in a transition to a subscription-based revenue model, which has begun contributing significantly to its profitability.

Turning our focus back to Meitu’s growth, the company’s strategy is succinctly characterized by three guiding principles: adopting a differentiated approach to AI, focusing on their strengths in product offerings, and achieving a sustainable business model. As of June 2023, Meitu unveiled its proprietary AI large model, distinguishing itself in the market by explicitly stating its avoidance of general large models. Instead, the company aims to enhance its existing image and design applications through this technological integration.

Moreover, Meitu has embraced an adaptable approach toward model acquisition: while fostering its own developments, it does not shy from procuring external models, allowing for expense control during pre-training. Such strategies afford Meitu the flexibility to balance investment in research and development with profitability, ensuring healthy cash flow.

More crucially, the linchpin of Meitu’s operations lies not in mere technological superiority but rather in its ingrained product capabilities and heritage. Having spent 16 years in the imaging application sphere, Meitu has forged renowned products like MeituXiuxiu and Beauty Cam, culminating in a vast user base that lends itself to the application of AI capabilities. Notably, these products can evolve into AI applications themselves—demonstrated by functionalities like AI photography enhancement, removal, painting, and upscaling now present within MeituXiuxiu.

As Meitu continues to cultivate its business, key tactics such as rapid engineering and product iteration have been foundational to constructing their diverse AI product portfolio. The company’s trend of aligning product launches with user needs and pain points has yielded actionable insights; for instance, the creation of Meitu Design Studio stemmed from the significant demand for e-commerce designed graphics, swiftly responding to market requirements.

Transitioning from revenue derived predominantly from advertising to a subscription-based model represents a further evolution in Meitu’s business strategy. As the market increasingly recognizes subscription models as stable and scalable revenue streams, it also acts as a benchmark for Minx, where growth can be tracked via more reliable indicators such as paid user penetration rates. As of June 2024, Meitu announced a paid user penetration rate of 4.2%, indicating significant potential for future growth.

Looking ahead, investors are particularly keen on the sustainability of Meitu’s growth trajectory driven by AI and its subscription model. Evidence suggests that certain product features, as long as they adequately meet user demands, can lead to revenue growth with relatively low marginal costs. This leads analysts, including those at Morgan Stanley and CITIC Securities, to predict an increase in Meitu's profit margins from 61% to 67% between 2023 and 2026.

Nonetheless, as Meitu forges this path, global markets might present exciting new opportunities, especially with plans to venture overseas. In recent engagements with investors, the company disclosed a formal presence established in the U.S. and Australia, with intentions of fostering its international reach.

Despite some investor concerns about the technology landscape being fiercely competitive, Meitu has historically navigated challenges adeptly. Even amid competition from major players like ByteDance, MeituXiuxiu has retained its leading market share, demonstrating resilience and market adaptability.

In the end, the investment value in Meitu rests on its transparent growth metrics, a clear product differentiation strategy, and capitalizing on global market prospects. As the world continues to shift towards AI-driven solutions, Meitu stands at an intriguing crossroads where its legacy products can meld with innovative technologies, suggesting that Meitu could continue to be a key player and a valuable asset within the ever-evolving landscape of AI applications.