Alibaba-backed video site Bilibili slumps in Hong Kong $2.6 Billion IPO debut

29 Mar, 2021 16:13
source: Singularity Financial

Singularity Financial Hong Kong March 29, 2021 – Bilibili’s opening price fell just over 6 percent in early trade after the firm raised around $2.6 billion in a secondary listing on Hong Kong’s bourse.

Shares of the fast-growing video streaming service closed 1% lower on Monday, paring losses of nearly 7% in its Hong Kong trading debut on Monday as analysts said a U.S. regulatory crackdown on listed foreign firms hit enthusiasm for the Chinese online video site.

Bilibili’s $2.6 billion listing comes after a string of block trades rattled U.S. markets and American regulators last week revived concerns over potential delistings by implementing a law requiring stricter audit inspections. Its disappointing debut also follows Baidu Inc., which last week closed unchanged on its first day of trading in Hong Kong and has since dropped 19%.

In his first interview with international media, Bilibili chief executive Chen Rui said he’s unconcerned with short-term market gyrations. All internet users in China — numbering nearly 1 billion as of December — will eventually adopt the format, Chen predicts. The company intends to prioritize improving its content and growing its user base over the next few years over profitability, in order to capitalize on the video mega-trend.

The company forecast revenue to grow at least 73% to 3.7 billion yuan ($565 million) this quarter and aims to double its monthly active users by 2023.

“With support from Tencent and Alibaba, Bilibili looks well-positioned to capture the long-term trend in the Gen Z entertainment market across content, community, and commercialization,” said Jefferies analysts led by Thomas Chong in a February note. It’s “one of the key beneficiaries to capture the secular trend in video consumption.”

Investors embrace Bilibili as a way to tap into the growing buying power of China’s Gen Z population, which has also supercharged startups like toy maker Pop Mart International Group Ltd. and social commerce app Xiaohongshu. Over 86% of Bilibili’s monthly users are aged 35 and below, iResearch estimated.