Bilibili Inc. (NASDAQ: BILI ) One of the largest video content platforms in China. It is often referred to as YouTube (NASDAQ: GOOGL ) of China. There are similarities and differences with their operating models. Chinese stocks are back in style as the government eases restrictions on its zero-covid policies.
The reopening has sent Chinese stocks soaring E-commerce Sites included Alibaba Group Holding Ltd. (NASDAQ: BABA ), Pinduoduo Inc. (NYSE: PDD )And JD.com, Inc. (NYSE: JD ). Chinese electric vehicle stocks are also favored NIO, Inc. (NYSE: NIO ) And Xpeng, Inc. (NYSE: XPEV) It saw a double-digit profit. Although there is a bear market in stocks, many Big Chinese internet companies Still growing. Pinduoduo sales are up over 60%. Bilibili saw an 11% rise in quarterly revenue from its year-ago quarter. Shares have risen more than 200% since the lows made in October 2022.
Similarities with YouTube
YouTube has many similarities. Bilibili is a video sharing platform where anyone can create a channel and upload user-generated content. By allowing visitors to post comments they can also gain followers. They can partially monetize their channels from philliply, but also receive donations from viewers, similar to Super Chat donations on YouTube. The site also takes a percentage of them. Content creators can strike deals directly with advertisers and charge members for bonus content and features, called Patreons.
Differences with YouTube
There are key differences with YouTube. Philly is one-tenth the size of YouTube. While YouTube had its origins as a user-generated content platform focused on personal experiences, Blibili began as a video platform strictly focused on Anime, Comics, and Games (ACG). Bilibili was turned by Alibaba and a competitor Tencent Holdings Ltd. (OTCMKTS: TCEHY).
Bilibili is an e-commerce platform that monetizes through advertising, mobile games and merchandising. YouTube shares more than half of its ad revenue with qualifying content providers, while content creators on Philly collect much less. Content creators negotiate directly with advertisers to deliver their products. Bilibili is mainly aimed at a Chinese audience, while YouTube is international.
Rollercoaster price action
BILI stock is not for the faint of heart. It’s been a rollercoaster ride over the past three years. Looking at prices, BILI shares traded at a pre-COVID high of $29.01 in February 2020 and a low of $19.25 in March 2020. Shares have since rallied, hitting a post-pandemic high of $157.40 in February 2021. .
Shares retook a long treacherous rally to an October 2022 low of $8.23. A breakout of $11.74 in mid-November created a weekly market structure low (MSL) that created a buy trigger and continued to rally to 16.88 before pulling back. Earnings fell to $12.23 prior to the release.
The biggest volume was triggered by the Q3 2022 earnings release on November 29, 2022. Shares moved higher through the weekly 20-period exponential moving average (EMA) at $18.19 and the weekly 50-period MA at $23.92. Volumes exploded as money flowed into Chinese stocks following the reopening. BILI stock has pullback support levels at $18.00, $17.14, $15.73, $14.27, $12.87, and $11.74 weekly MSL trigger.
Record user engagements
YouTube has video ads that run at the beginning of the video and during the break for non-premium subscribers. It can distract and turn off the audience. Blibili is able to overlay comments and ads while the video is playing, making it less intrusive and engaging for viewers. In fact, daily time spent on Philly was a record 64% increase, with 3.7 billion average daily video views in 96 minutes on the platform. The relatively young user base is also notable as 80% of them are under the age of 24.
AI and Algorithms vs. Humans
YouTube is powered solely by algorithms to generate recommendations, while Philly also uses algorithms and allows administrators to watch videos and make recommendations to match them with viewers. Auditing the elephant in the room. Some topics can be censored in China, whereas political views that conflict with the government, YouTube allows them but will also censor content related to COVID-19.
Impressive growth but losses still loom
Bilibili announced its fiscal Q3 2022 earnings on November 23, 2022. The company reported a loss of (-RMB 4.46) per share (-RMB 4.66), by RMB 0.20. Revenues rose 11.3% year-over-year (YoY) to RMB 5.79 billion or $832.16 million, beating analyst estimates of RMB 5.66 billion or $813.45 million. Annual active customer accounts increased 6.5% to 588.3 million.
Rui Chen, CEO of Bilibili commented, “While our community is key to our long-term success, we believe it is important to adapt to an increasingly challenging macro environment. Putting profitability first, we will make extra efforts to accelerate our monetization. We will also implement cost control measures, including intervention planning and reduction of sales and marketing expenses, aimed at improving our profitability and reducing losses.
Risks of restrictions remain
By the end of November 2022, China has begun to relax the rules of the zero-covid policy with 20 conditions, helping it slowly reopen its economy after much scrutiny and protests. They eased Covid restrictions, abandoning testing for domestic travel. Health officials are still adamant they are monitoring trends in deaths and evidence to gauge further options, which could include rolling back tighter restrictions.
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