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Bilibili Shares Have Jumped 200% in the Last 12 Months. Here’s Why

Want to know why Bilibili Inc’s (NASDAQ: BILI) share price has surged over the past year? Here’s what investors need to know. – Streaming stocks

Bilibili Inc (NASDAQ: BILI) is a Chinese entertainment company providing content in various media formats, including videos, live broadcasting, and mobile games. It focuses primarily on customers from generation Z – individuals born after 1990.

In the last 12 months, the company’s stock price has surged more than 200%. In this article, I’ll try to understand what might have been the drivers behind this rally.

Why the rising stock price?

Many reasons cause stock prices to move. Generally, stock price movement is driven either by business performance or investor sentiment.

The former is related to how a business performs in a given period, looking at metrics like growth, margins, production, and others. Here, the ultimate driver is profit.

The latter is driven more by investors’ overall mood, which is described by emotional pairs such as greed and fear, optimistic and pessimistic, or bull and bear.

In the case of Bilibili, I believe both factors contributed to its stock performance.

Solid business performance

Since its IPO in 2018, Bilibili has been delivered strong performance across its business. Let’s look at two important metrics to better illustrate that.

 

Source: Bilibili’s Results Presentation

The first chart shows the company’s monthly active users (MAUs) in recent quarters. In the last four quarters alone, it has added about 71 million new MAUs (up by more than 70% year-on-year).

Similarly, net revenue has been growing every quarter for the last two years, thanks to the growing MAUs and higher revenue per user.

Going forward, Bilibili expects next quarter’s revenue to be between RMB 2.5 billion (US$357.1 million) and RMB 2.55 billion, up by 63% and 67%, respectively, on a year-on-year basis.

Market sentiment

Bilibili’s strong business performance has not gone unnoticed by market participants, who clearly liked the numbers and bought its shares.

In addition, the recent Covid-19 outbreak rally among technology stocks further enhanced the already-positive sentiment, driving Bilibili’s shares to break multiple all-time highs.

Foolish takeaway

In sum, Bilibili reported solid performance since its IPO. This explains the trajectory of its share price. Still, investors should be cautious since the company remains unprofitable.

Going forward, investors will need to watch closely the company’s ability to sustain its growth, and more importantly, its moves towards profitability.

More reading

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.

The Motley Fool Hong Kong Limited(www.fool.hk) 2020

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