By refocusing on what matters most, its main revenue generator which is the gaming department made investors bullish on BILI stock.
This website provides online entertainment services for young people in the People's Republic of China. Its platform provides a variety of content, such as video services, mobile games, value-added services, and ACG-related comic and audio content. Professional user-generated videos, occupationally generated videos, and live broadcasting are among the video services offered by the company.
Bilibili went public on the Nasdaq in 2018, with gaming accounting for roughly 80% of total revenue. However, the company has struggled to find new hits over the years, while other Chinese companies, such as miHoYo and NetEase, Inc (NTES), have made headway. Despite having over 300 million monthly users on its video platform, Bilibili struggled to make a profit. As recently as the June 2022 quarter, revenue fell 15%, accounting for about 21% of total revenue.
According to reports, Chen Rui, the CEO, has taken over direct supervision of the company's gaming department as the Alibaba Group Holding Limited (BABA) backed company looks to boost revenue growth. Bilibili's human resources department emailed employees that those in the company's gaming department will no longer report to Zhang Feng, a senior vice president. This has been interpreted as an attempt to refocus on its gaming business, which had previously been a significant revenue generator.
This refocusing of the company on its core money maker is one of the significant reasons why the stock rose recently giving investors bullish sentiment about the company. Following this news, the company saw unusually large options trading activity. This week, investors purchased 49,677 call options on the stock on Tuesday alone. This represents a 144% increase over the average volume of 20,318 call options. Analysts have set short-term bullish price targets of a mean estimate of $38.30, implying a significant potential of 197.4%. This viewpoint is supported by analysts' consensus that the company will report higher earnings than previously estimated.
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Our BILI stock pick was the best performer. It was part of our weekly (7-day) forecast that we made public on Thursday, November 10, for our subscribers who receive exclusive market insights based on artificial intelligence.
This stock was the number 3 stock pick which you can see for yourself on the original forecast published a week ago on November 10, 2022. This success was available in our basic subscription the Top 5 AI Stock Picks + SP 500 Forecast.
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Stock Ticker | Open: Nov 10, 2022 | Close: Nov 17, 2022 | ROI% |
Bilibili (BILI) | $11.03 | $15.79 | 46.47% |
Subscribers who bought BILI based on our stock market forecast from the November 10 2022 weekly forecast would have netted a profit of 46.47% or $5.01 per share on this single shorter-term trade. Discretion should always be used when analyzing the market. Your own due diligence is always required and you should always get advice from a licensed & certified financial counselor prior to implementing any financial plans.
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Sources: 1. Reuters, "CEO of China's Bilibili to manage gaming unit in bid to boost revenue" (2022)
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