"Deep squat jump": The losing side, how to get a ticket to the AI second half?

On the evening of February 21, Keep (03650) issued a profit warning for the 2024 annual performance on the Hong Kong Stock Exchange. The announcement stated that the adjusted net loss for Keep for the 2024 financial year (non-International Financial Reporting Standards measured) is expected to be between 4.6 billion and 4.9 billion Chinese Yuan, with an increased loss compared to the previous year. At the same time, the announcement pointed out that the company strives to achieve a balanced budget in 2025. From the current perspective, Keep's 2024 can be described as a blend of challenges and opportunities, with both pressure and motivation coexisting. Although it may temporarily be overshadowed by the "loss" cloud, the simultaneous release of the expectation to turn losses into profits in 2025 can be seen as Keep preparing for action in the field of sports technology once again. Regarding the expansion of losses in 2024 and the optimism for 2025, the seemingly contradictory signal sent by Keep to the market carries a deeper meaning. By delving into its investment direction and strategic intent, it's not difficult to see that behind the short-term increase in losses, Keep is actively choosing to "squat deep" and build momentum. In the profit warning announcement, Keep attributed the expected increase in adjusted net loss to changes in the consumer market environment; consumer confidence becoming cautious, weakened purchasing power leading to some goods not meeting expected market effects; and the company continues to invest resources in new strategic businesses and technological innovations to strengthen long-term competitiveness, resulting in increased expenses. Specific investment directions include the development and promotion of artificial intelligence-related applications, innovation of wearable fitness devices, sports-themed marketing and branding, and expenses related to organizational structure adjustments. It can be seen that in the increasingly competitive fitness technology industry, Keep chooses to reshape its business logic with AI as the core. This strategy not only responds to short-term loss doub... **The rest of the text is cut off.**Growth rate 31%. According to Gartner's prediction, by 2026, 70% of fitness apps will embed AI personalized functions, and user payment rates will increase by 2-3 times. It can be seen that AI is rapidly rewriting the competitive rules of the sports technology industry. While traditional competitors are still focusing on course copyright disputes, Keep has already shifted towards technology-driven user experience reconstruction.In recent years, in terms of intelligent applications, Keep has been continuously launching new features and refining user experience. From the perspective of online content, among the 5000 official exercise courses offered by Keep online, 15% are generated by AIGC (Generative AI Content). In the future, Keep will also focus on professional courses and exercise data, introducing algorithm capabilities to enhance professionalism. Additionally, Keep has also introduced the AI assistant Kiri, which helps users generate personalized training plans, achieving personalized recommendations for thousands of users. In 2024, Keep launched multiple fitness applications overseas. It quickly accumulated users in the United States and Southeast Asian markets, and generated personalized training or diet plans for global users through Chat GPT and Claude. During this process, Keep introduced AI Coach, which analyzes user exercise data and dynamically generates courses in real-time, replacing traditional pre-made content. This upgrade transformed Keep from a "fitness enthusiasts' exclusive tool" to a "universal exercise assistant". These dynamically generated courses can cover diverse needs ranging from fitness beginners to professional athletes, further reaching out to more user groups, with the user base expected to surpass the original circle of users. Of significant importance, AI technology is attempting to reconstruct Keep's business model: transitioning from the traditional subscription model relying on the scale of content libraries to "AI service payment", where users pay for personalized guidance. This "pay-as-you-go" model can significantly increase ARPU, promoting long-term user exercise habits formation and accompanying commercial potential. Finally, Keep combines its self-developed smart wearable devices with AI technology to gradually form a closed-loop ecosystem of "data collection-analysis-feedback". Hardware sales not only bring direct revenue, but also feed AI algorithms through user behavioral data, creating a "more intelligent with more usage" flywheel effect. The landing and iteration of these application functions will further be improved with the efficiency revolution triggered by Deep Seek in the future. Perhaps market doubts have not completely disappeared, but in the current AI restructuring of valuation logic, Keep's choice is a bet on industry trends and its own last-ditch effort. It must be acknowledged that in the field of sports and fitness, there has always been demand and willingness to pay for applications like Keep. For further growth, it is necessary to rely on technological advancements to provide users with a better experience. This also tests Keep's stamina in the field of AI, as well as its ability in long-tail operations. However, in the short term, losses may be the pains of strategic transformation, and this "deep squat" of gathering strength still holds the potential to be a valuable "springboard".