Bilibili Inc. (BILI) is an online entertainment services platform in China, which covers a wide range of genres and media formats like live broadcasting, videos, and mobile games. While its advertising and broadcasting businesses have grown significantly in the third quarter, BILI is poised to benefit from the fast-recovering Chinese economy. The massive reach of its premium membership program and increasing demand for the other products in its portfolio have been helping the company thrive.
BILI’s daily active users increased 42% year-over-year to 53.3 million in the third quarter ended September 2020. This skyrocketing growth is expected to continue for the foreseeable future since BILI has the opportunity to tap into a large segment of potential users. Also, its newly launched mobile games and a series of other online campaigns have helped it improve its overall paying ratio considerably.
BILI’s expanding content library and impressive user acquisition strategy have allowed it to gain 307.7% year-to-date. This impressive performance combined with several other factors has helped BILI earn a “Buy” rating in our proprietary rating system.
Here’s how our proprietary POWR Ratings system evaluates BILI:
Trade Grade: A
BILI is currently trading above its 50-day and 200-day moving averages of $52.47 and $40.32, respectively, indicating that the stock is in an uptrend. Also, the stock gained 71.7% over the past month, reflecting solid short-term bullishness.
BILI’s net revenue increased 74% year-over-year to $475.10 million in the third quarter ended September 2020. Gross profit increased 117% from the year-ago value to $112.20 million. The company’s average monthly active users increased by 54% year-over-year to 197.2 million over this period.
The company has recently entered into a definitive subscription agreement with Huanxi Media Group Limited. Under this BILI made a significant equity investment of US$66 million in the company. BILI has also entered into a three-year strategic partnership with Riot Games for the live broadcast of League of Legends games in China. These strategic partnerships will allow BILI to broaden and diversify its content to appeal to a wider audience and thereby, support its future growth.
Buy & Hold Grade: B
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade takes into account, BILI is well-positioned. The stock is currently trading just 7.4% below its 52-week high of $81.98, which it hit on December 11th.
The company’s net revenue grew at a CAGR of 73.3% over the past three years. This can be attributed to the exceptional growth in its user numbers and significant expansion of its online content.
Peer Grade: A
BILI is currently ranked #13 out of 115 stocks in the China group. Other popular stocks in this group are Baidu, Inc. (BIDU), Vipshop Holdings Limited (VIPS), and Zai Lab Limited (ZLAB)
BIDU, VIPS, and ZLAB gained 38.6%, 82.1%, and 159.8% over the past year, respectively. This compares to BILI’s 332.8% returns over this period.
Industry Rank: B
The China group is ranked #32 out of the 123 StockNews.com industries. China has demonstrated impressive recovery at a time when most economies are in a recession. The Chinese economy has bounced back from the virus slump, resuming all business operations after successfully flattening the curve, while most economies are experiencing a second wave of infections. Hence, stocks in this group present a huge opportunity for investors across the globe.
Overall POWR Rating: B (Buy)
BILI is rated “Buy” due to its impressive financials, short-and-long-term bullishness, solid price momentum, and underlying industry strength, as determined by the four components of our overall POWR Rating.
Bottom Line
BILI is well-positioned to soar in the upcoming months despite gaining more than 300% so far this year, as consumers are spending more time online to virtually connect with others and for entertainment.
Analyst sentiment, which gives a good sense of a stock’s future price movement, is pretty impressive for BILI. It has an average broker rating of 1.1, indicating favorable analyst sentiment. Out of 30 Wall Street analysts that rated the stock, 26 rated it a “Strong Buy.” The consensus EPS estimate for the next year indicates a 37.4% improvement year-over-year. The consensus revenue estimate of $2.60 billion for the next year indicates a 45.7% increase from the same period last year.
BILL shares were trading at $144.19 per share on Monday morning, up $0.76 (+0.53%). Year-to-date, BILL has gained 278.95%, versus a 16.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.
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