Bilibili Inc. (NASDAQ:BILI), the YouTube of China, is the subject of renewed investor interest after reporting solid third-quarter results. The Chinese Tech company, which went public in March, came under immense selling pressure on skyrocketing to record highs of $22 a share. The stock has since bounced back after initially plunging to below the IPO price.
The company reporting a 48% increase in revenue is one of the catalysts that continues to strengthen the upward momentum. The announcement of a strategic partnership with tech giant Tencent has also caught the attention of investors further fuelling a rally on the upside.
The stock is currently trading in an uptrend after bouncing back after a steep pullback. Price action points to continued movement on the upward, the stock having turned bullish. Pullbacks have turned out to be, buy opportunities from where buyers have come in and continued to push the stock higher.
After a breach of the $14 resistance level, the stock is on its way to the $17 a share level, seen as the next substantial resistance level. A rally followed by a close above the resistance level should open the door for the stock to make a run for its 52-week highs of $22.
Why is Bilibili Skyrocketing
Renewed investor interest in Bilibili comes on the company delivering a narrow than expected net loss as well as revenue increase in Q3. Revenue in the quarter was up 48% to $157.1 million beating consensus estimates of $147 million. Net loss narrowed to -RMB0.72 from a net loss of -RMB1.03 reported a year ago.
The company is projecting revenue growth going forward as its diverse content continues to attract new users. Bilibili has seen its user base in the recent quarter surge to 3.5 million people representing a 202% year over year increase. Enhancing and expanding the current library is top on the agenda as the online video company looks to attract more users.
“[…] Our community is flourishing with a higher-than-ever level of user engagement, leading to a remarkable increase in time spent per DAU to 85 minutes, compared to 75 minutes in the preceding quarter. Looking ahead, we will continue to raise the bar for content quality and improve user experience,” said CEO, Rui Chen
Tencent Investment
In addition to the solid financial results, Bilibili has caught the attention of investors on confirming a strategic partnership with Tencent. The partnership paves the way for the company to expand its operations into anime projects in addition to operating more Tencent games.
The two have agreed to exchange and purchase from each other anime copyright, as well as jointly procure, produce and invest in anime projects. The collaboration comes on Tencent confirming a $317 million investment in Bilibili taking its stake in the company to 12%.
Bottom Line
A partnership with accompany of Tencent status should boost Bilibili popularity among the Millennials. The company should thus be able to attract more new user’s key to strengthening revenue growth. In addition to targeting anime projects, Bilibili has also sought to expand its gaming ecosystem through things like streaming videos, online ads as well as e-commerce as it seeks to strengthen its revenue streams.
Bilibili is destined to continue powering high after the recent bounce back as fundamentally, things look solid. The stock only sagged mid this year on the broader Chinese tech stock market coming under pressure on growing concerns about a slowdown in Chinas economy.
Sentiments have changed in the recent past, and the stock market has bottomed out further supporting the upward run. That said the stock should continue climbing high on strengthening investor’s confidence about the online video company’s long-term growth prospects.