Bilibili Stock Goes up by 6% As the Focus Shifts From Earnings to the Outlook

Bilibili Stock

Bilibili Stock (NASDAQ:BILI)

Despite a rough start to Thursday’s trading, when Bilibili (NASDAQ:BILI) dropped as much as 7.5%, the stock recovered to become one of the best gainers in Communications names as a reaction to the print rolled in. The report showed mixed results for the fourth quarter, with revenues missing consensus and 2023 guidance looking light.

By the start of the afternoon, Bilibili stock was up 6.1% from its morning lows.

A significant reason for the first negative response was Bilibili’s revenue projection for 2023, which was for 24B-26B yuan, an increase of 10-19% year over year. However, the Wall Street consensus was closer to 26B yuan or more.

J.P. Morgan analyst Daniel Chen stated, “we view the guidance to be cautious, given there are still numerous uncertainties in BILI’s different business sectors’ 2023 outlook,” despite expectations that the forecast would cause investor anxiety. The future of Bilibili’s advertising business hinges on the likelihood of a sustained economic recovery. At the same time, approving new games is an important secondary factor (especially import game license timing for the vital pipeline in Pretty Derby).

Daily active users increased by another 3% sequentially and 29% annually to 92.8M, a solid performance in a typically tricky quarter, as observed by Chen. Per-user daily engagement maintained a high level, at 96 minutes on average (up 17% year over year).

CEO Rui Chen said that increasing top-line revenue, decreasing losses, and pursuing growth in high-quality users will be the company’s major priorities for the year 2023 during the results call.

According to Chen, the firm reduced its net loss by 29% in the last quarter and plans to make further significant reductions this year to reach break-even by 2024.

As he continued, he said that the company’s goal isn’t simply to increase the total number of monthly users and the number of individuals that log in daily (and related sales conversions). Currently, the Bilibili stock DAU/MAU ratio is at 28%, although Chen has said they want to grow it to 30%.

Featured Image: Pexels @ Erik Mclean

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