Bilibili Stock: Bear vs. Bull


bilibili‘S (NASDAQ:BILI) The stock price hit an all-time high of $157.66 last February. That represents a whopping 1,271% gain since its IPO in March 2018.

Back then, the Chinese gaming, streaming media and e-commerce company seemed an attractive alternative to tech giants like Alibaba (NYSE:BABA) and Tencent (OTC: TCEHY) — both of which have come under scrutiny by the country’s antitrust authorities.

Image source: Getty Images.

But as of this writing, Bilibili shares are trading at just $38 per share. China’s continued crackdown on its top tech companies, rising interest rates and worries about Bilibili’s shrinking margins, mounting losses and mounting debt have taken a toll on this high-flying stock.

But have investors overreacted and thrown out a baby with the bath water? Let’s review the bear and bull cases to see if Bilibili is worth buying again.

What the bears will tell you about Bilibili

Bears will point out that Bilibili generated 28% of its revenue from mobile games in the first nine months of 2021. This company that publishes hit games like Destiny/Grand Order, is vulnerable to China’s stricter video game licensing standards and tougher underage play time limits. It’s also facing tough challenges as people play fewer games in a post-lockdown market.

As a result, Bilibili’s mobile game revenue grew just 3% year over year in the first nine months of 2021, compared to a 34% growth in 2020.

The bears will also note that Bilibili’s value-added services (VAS) segment, which generated 37% of its revenue in the first nine months of 2021 (mainly from selling virtual gifts and subscriptions to live streamers), has been disrupted by stricter censorship standards and intense competition from short video platforms like ByteDance’s Douyin (known as TikTok abroad) and the popular video game streaming platforms Huya and DouYu.

Bilibili’s VAS revenue still grew 94% year over year in the first nine months of 2021, but that was a slowdown from 2020’s 134% growth.

Bilibili’s other two main businesses — advertising (22% of revenue in the first nine months of the year) and e-commerce (the remaining 12%) — also generated significantly slower revenue growth in 2021.

As Bilibili’s revenue growth slows, its gross margins shrink while its net losses continue to widen:


Fiscal year 2020

9M 2021


$1.8 billion

$2.1 billion

growth from year to year



gross margin



net loss

($468 million)

($741 million)

Source: Bilibili.

Bilibili can’t afford to keep burning cash at this level, having ended its third quarter with just $1.65 billion in cash and equivalents. That’s why the company offered a new $1.4 billion convertible bond issue last November that is likely to increase its debt-to-equity ratio from about 0.8 to 1.2.

Bilibili has previously repeatedly diluted its shares with secondary and convertible debentures. As a result, the total number of shares outstanding (weighted average) has increased by over 60% since the end of 2018.

This toxic combination of slowing growth, mounting losses, mounting debt, and continued dilution makes Bilibili a hard stock to recommend as rising interest rates penalize unprofitable tech companies.

Finally, there’s a chance that Tencent and Alibaba, two of Bilibili’s top backers, will have to divest their stakes to comply with tighter antitrust rules. If so, Bilibili’s ties to these two tech giants could weaken and the stock could fall to new lows.

What the cops will tell you about Bilibili

Bilibili faces many challenges, but its core target group of Gen Z users continues to grow. It ended Q3 2021 with 267.2 million monthly active users (MAUs), representing 35% year-over-year growth as its monthly paying users (MPUs) grew 59% to 23.9 million.

The number of “official” members who must pass a 100-question “exam” about anime, comics and games to gain access to additional perks also increased 38% year over year to 133.6 million in the quarter. Those hardcore fans can be more easily converted into paid users.

The bulls will also argue that Bilibili’s gaming business isn’t as vulnerable to China’s tougher underage gaming restrictions, as it derives “less than 1%” of its gaming revenue from players under the age of 18. The games had already been approved last quarter, suggesting that , that the gaming segment could recover quickly after putting through its difficult year-on-year comparisons with the pandemic.

Eventually, the bulls will indicate that Bilibili stock has gone up extremely cheap compared to its long-term revenue growth estimates:


Fiscal year 2021

Fiscal year 2022

Fiscal year 2023

Sales Growth Forecast




price-to-sales ratio




Source: S&P Global Intelligence. Chinese Yuan Terms.

Many American tech stocks that are posting comparable sales growth to Bilibili are still trading at double-digit price-to-sales ratios. So if regulatory headwinds ease and Bilibili stabilizes its losses, its stock could potentially double and still be considered reasonably valued.

Is it worth buying Bilibili?

Bilibili is not doomed just yet, but it will remain unpopular as Chinese stocks face regulatory challenges and interest rates continue to rise. As such, investors should avoid Bilibili for now and stick with more reliable blue-chip tech stocks in this challenging market.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tencent Holdings. The Motley Fool recommends Bilibili. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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