Bilibili debuts in Hong Kong after tech fades

Bilibili Inc. fell on its Hong Kong debut, becoming the last U.S.-listed Chinese company to disappoint when it returned home in a global sell-off of the country’s tech stocks.

Shares of the fast-growing video streaming service closed down 1% on Monday, cutting losses by nearly 7%. Bilibili’s $ 2.6 billion listing comes after a series of block transactions rocked US markets and US regulators last week rekindled concerns over write-offs by implementing a law requiring more stringent audit inspections. His disappointing debut also follows Baidu Inc., which closed unchanged last week on the first day of trading in Hong Kong and has since fallen 19%.

In his first interview with international media, Bilibili General Manager Chen Rui said he was not concerned about short-term market fluctuations. The company – which has 200 million monthly millennials or mostly Chinese Gen Z users, along with backing from Tencent Holdings Ltd. and Alibaba Group Holding Ltd. – will use most of the income from the sale of stocks to strengthen its content and support its creators, in anticipation of an explosive growth in online video adoption over the next few years.

All Internet users in China – numbering nearly 1 billion in 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 rather than profitability, in order to capitalize on the video mega-trend.

“We wouldn’t care too much about the short-term performance of the stock market,” the 43-year-old billionaire entrepreneur told Bloomberg Television, adding that the company has long planned to list in Hong Kong. “No one will remember if your stock rose or fell when it started in 10 years.”

In 2009, Bilibili was born as a forum for game and anime fans like its creator Xu Yi, a then 20-year-old student. But it was Chen who turned the site from an after-school project into a promising venture when the serial entrepreneur took over in 2014. Bilibili has since cleaned up pirated content on his platform while investing a half a billion dollars in broadcast rights since 2018. It has grown into adjacent businesses including live streaming, e-commerce and game publishing, its biggest cash cow.

Along the way, Chen, who once co-founded the app maker Cheetah Mobile Inc., has secured investments from both Tencent and Alibaba, a rare feat in the internet arena in China where newcomers typically line up with one of the twin giants. The company has partnered with Tencent and Alibaba on content production and e-commerce, respectively, and could “further deepen ties” with the two sides, said Chen, who owns around 13% stake but around 44%. voices. Sony Corp. also owns a stake in the company.

Videos “will be a major trend for the Internet industry over the next three to five years,” Chen said. “The market will experience ultra-rapid growth over the next few years. Popular video platforms like us will all have great opportunities. “

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

“With the support of Tencent and Alibaba, Bilibili appears well positioned to capture the long-term trend of the Gen Z entertainment market through content, community and marketing,” said analysts at Jefferies led by Thomas Chong. in a February note. It is “one of the main beneficiaries for capturing the age-old trend of video consumption.”

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