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Bilibili Inc. (BILI): Second listing in Hong Kong

Bilibili’s primary target audience is “Gen-Z+” consumers, born between 1985 and 2009, and they are proud to have a committed and dedicated fanbase. Its videos target topics, namely cosplay, fashion, anime, technology, esports, celebrities. Apart from this, they have ‘bullet chats,’ a format Bilibili pioneered, in which comments fly across the screen during a video.

The Chinese video streaming platform is all set for its second listing in the Hong Kong stock exchange after having a successful year. It is expected that the firm could raise about $3 billion from the share sales. The IFR’s approval was previously reported, which stated that the share sale could launch as soon as next week.

This step would help Bilibili join the expanding group of Chinese companies seeking domination in the Hong Kong exchange sector. Moreover, as China and the US’s political tensions are increasing, the Asian financial centers are becoming an increasingly hot market for new listings.

The company is joining a group of US-listed Chinese firms that have sold shares in Hong Kong in recent years to attract investors who are more aware of the Chinese business landscape. This act could also help Bilibili minimize the risk of a potential delisting in New York due to its auditing secrecy and vagueness.

Bilibili is set to sell 25 million new shares to investors and fix the final offer price on March 23rd. The expected listing date is March 29th under ticker 9626. The company set the maximum offer price for a smaller portion of stock reserved for individual investors at 988 Hong Kong dollars per ordinary shares, making $127 each. However, the offer price of shares sold to institutional investors could be higher than this. One ADR (American Depository Receipt) represents one Class Z ordinary share: the same share being sold in the Hong Kong offering.

Coming to the recent performance of Bilibili in 2020. The pandemic acted as a blessing in disguise for the company’s financial condition. The platform had 202 million average monthly active users in the fourth quarter of 2020, a 55% increase over the same period in 2019. Cell phone users accounted for over 90% of monthly active users in 2020.

In the third quarter of 2020, Bilibili released a ground-breaking performance. Revenue surged a record of 3.2 billion yuan ($489 million) across all segments. Moreover, the gross profit surged 117% year over year due to the revenue growth and improved operating leverage. Apart from this, the user engagement has been strong, with users spending an average of 81 minutes per day in its comprehensive ecosystem. In retrospect, the users viewed an average of 1.3 billion videos per day, up 77% year over year.

With the solid performance mentioned above, it can be stated confidently that the company is on an upward trajectory of profit and growth. The future looks bright for the company as it has started to invest in its content heavily. Following the recent success, the company focuses on expansion by doubling down its investments in the content to boost the upward trajectory of success. Moreover, users are spending more time on Bilibili’s ecosystem, and they are willing to pay for its premium content. This statement is backed by the fact that 15 million users spent money on the platform in the latest quarter, which is an 89% year over year increase.

Bilibil’s news of the second listing in Hong Kong will act as a catalyst along with its excellent 2020 performance. The company has solid plans for the future and aims to increase the active user base and improve its monetization. However, investors should not rush into buying shares straight away. The company had a bullish pattern over the past months in NASDAQ’s index, so a pull-back would not be surprising. Apart from this, Bilibili could act as a tremendous growth stock for investors aiming for investing in a second listing.

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