Is Bilibili a Buy Under $30?

: BILI | Bilibili Inc. ADR News, Ratings, and Charts

BILI – Although the entertainment services company Bilibili (BILI) reported stable top-line growth in its last quarter, its widening losses and negative profit margins have raised investors’ concerns. So, would it be worth betting on the stock at its current price level, considering the SEC’s recent crackdown on U.S-listed Chinese companies? Read on. Let’s find out.

Bilibili Inc. (BILI) is a Shanghai, China-based online entertainment services company. Its platform provides content that includes video services, mobile games, value-added services, and ACG-related comic and audio content. Professionally created videos, occupationally made videos, and live streaming are among the video services the organization offers.

BILI’s shares are down 78.9% in price over the past year and 40.6% over the past month to close yesterday’s trading session at $21.68.

In addition, Goldman Sachs analyst Piyush Mubayi downgraded the stock to Neutral from Buy and lowered its price target to $43 from $105. The downgrade is based on the company’s monetization rate, profitability, and cash flow prospects, which have been impacted by worsening macroeconomic conditions in China and regulatory uncertainty in the online game/ad sectors.

Here is what could shape BILI’s performance in the near term:

U.S. Securities and Exchange Commission (SEC) Crackdown

The SEC recently named five Chinese companies that are publicly traded in the United States that have failed to comply with the Holding Foreign Companies Accountable Act (HFCAA). The American depositary receipts (ADRs) of these companies may be the first publicly traded Chinese securities to be penalized for failing to follow HFCAA requirements. This SEC investigation has resulted in a widespread selloff of Chinese stocks.

Negative bottom line

BILI’s total net revenue increased 51% year-over-year to RMB5.78 billion ($907.1 million) for the fourth quarter, ended Dec. 31, 2021. Its average daily active users (DAUs) grew 34% from its year-ago value to 252.4 million. However, its operating loss increased 50.5% from the prior-year quarter to RMB1.99 billion ($316.24 million). And the company’s net loss surged 148.4% from its year-ago value to RMB2.09 billion ($331.46 million), while its loss per share amounted to RMB2.34.

Poor Profitability

BILI’s 20.9% trailing-12-months gross profit margin is 59.5% lower than the 51.6% industry average. Also, its ROA, net income margin, and ROC are negative 13%, 35%, and 13.9%, respectively. And its trailing-12-month cash from operations of $115.37 million is 61.5% lower than the $299.40 million industry average.

POWR Ratings Reflect Uncertainty

BILI has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. BILI has a D grade for Stability, Quality, and Growth. The stock has a 1.34 beta, which is in sync with its  Stability grade. In addition, the company’s weak profitability and financials are consistent with the Quality and Growth grade.

Among the 50 stocks in the F-rated China industry, BILI is ranked #48.

Beyond what I have stated above, you can view BILI ratings for Value, Sentiment, and Momentum here.

Bottom Line

Considering the SEC crackdown on U.S.-listed Chinese stocks and the heavy regulatory pressure on tech stocks in China, investors remain concerned about BILI’s prospects. In addition, the stock is currently trading below its 50-day and 200-day moving averages of $34.82 and $70.93, respectively, indicating bearish sentiment. So, given the company’s negative profit margins and widening losses, we believe the stock is best avoided now.

How Does Bilibili Inc. (BILI) Stack Up Against its Peers?

While BILI has an overall D rating, one might want to consider its industry peers, NetEase Inc. (NTES), FinVolution Group (FINV), and China Automotives Systems Inc. (CAAS) which has an overall B (Buy) rating.

Note that FINV is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.

BILI shares rose $0.72 (+3.32%) in premarket trading Friday. Year-to-date, BILI has declined -53.28%, versus a -10.42% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
BILIGet RatingGet RatingGet Rating
NTESGet RatingGet RatingGet Rating
FINVGet RatingGet RatingGet Rating
CAASGet RatingGet RatingGet Rating

Most Popular Stories on

2024 Stock Market Outlook

The time to think about the 2024 stock market is now. Will it be a bull or bear? Where does the S&P 500 (SPY) end the year? And what are the top picks to outperform? Investment veteran Steve Reitmeister does his level best to answer all these questions. Just read on below...

3 Stocks Bringing AI to the Masses

Like it or not, large companies with a combination of cash and massive databases do have an advantage in the new AI world. These three companies are wielding that advantage to get a leg up in the rapidly changing AI landscape. Keep a close eye on how these companies, Meta (META), Alphabet (GOOGL) and Yelp (YELP) continue to take advantage of their respective incumbencies to shape the consumer’s interaction with AI.

With Oil Soaring, My Under $10 Stock of the Week

The number of oil rigs in the U.S. and Canada has decreased by 170 over the past year. International oil suppliers are cutting output. This opens the door to small oil and gas exploration and development companies like Baytex Energy (BTE).

Income Stock of the Week: Manhattan Bridge Capital (LOAN)

In the current high mortgage rate environment, and with financial instability growing in the commercial real estate market, you want to be extra diligent when investing in mortgage lenders. This lender has a sterling track record of providing short term loans to those needing some quick extra cash. And Manhattan Bridge Capital (LOAN) is rewarding investors with a hefty dividend.

Stock Market vs. Bond Rate Relationship Revealed

The stock market is affected by many things like the Fed and the economy. However, there is not enough talk about how the movement of bond rates makes stocks more or less attractive. Like how the S&P 500 (SPY) is having a terrible September as bond rates explode higher. Learn more about this dynamic relationship and what it means for stock prices in the days ahead.

Read More Stories

More Bilibili Inc. ADR (BILI) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All BILI News