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With Bilibili Stock Stuck in Neutral, Study Now and Buy Later

Third-quarter earnings for Bilibili (NASDAQ:BILI) stock will come out on Monday, Nov. 18, after the market close. The Chinese social media company launched its IPO in the spring of 2018. However, it remains mostly unknown to Americans.

Source: rafapress /

Still, with robust revenue growth and a large user base, Bilibili has become a name that China-focused investors should begin to watch.

Consensus profit estimates point to a loss of 14 cents per share for the company’s third quarter. This would come in 3 cents per share lower than the same quarter last year when BILI earnings came in at a loss of 11 cents per share.

Wall Street also predicts revenues for the quarter of $248.8 million. If this holds, it will represent a 65.2% increase from year-ago levels when the company brought in $150.3 million.

What Is Bilibili?

However, before commenting on the financial performance, most American investors need an explanation of BILI stock itself. Bilibili is a Chinese social media company that operates as a mix of Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) YouTube and Twitter (NYSE:TWTR). Its teen demographic also resembles that of Snap (NYSE:SNAP). Users can upload videos and add subtitles that resemble tweets.

The Bilibili site also offers mobile gaming. Hence, one can consider it a direct peer to Zynga (NASDAQ:ZNGA) or Glu Mobile (NASDAQ:GLUU), or, in its home country, Tencent (OTCMKTS:TCEHY). Its first quarter saw the company top 100 million monthly users for the first time.

The difficulty investors will have going into earnings is whether to buy beforehand. Honestly, this decision looks like a coin toss.

With the company not expected to turn a profit until 2021, investors only have revenues to evaluate the stock. Revenue growth is robust, with the amount of money brought in expected to increase by 51.6% this year and 47.2% in fiscal 2020. Also, its price-to-sales ratio stands at about 6.8. This is well above S&P 500 averages but significantly below other newly minted growth stocks.

Looking at the charts, it rose in October before plateauing this month. At a BILI stock price of just over $16 per share, it trades roughly at the halfway point between its 52-week lows and highs.

Keep China-Related Factors in Mind

That said, investors should keep in mind two China-related factors. As most of you know, it’s harder to invest in Chinese companies directly. Consequently, BILI stock is in a Cayman Islands-based holding company representing Bilibili. Hence, the market will discount it somewhat for this reason.

The other China factor hinges on the trade war. Granted, BILI stock has no direct relationship to the U.S. Nonetheless, traders have a history of buying and selling other Chinese peers based on the trade war, so these U.S.-China negotiations will likely affect Bilibili stock good or bad.

So, when will BILI stock become a buy? Since the decision to buy now looks like a tossup, I would wait until after earnings. However, if the report leads to a significant pullback, I see Bilibili stock as a buy on any dip. Moreover, if it rockets higher and can sustain itself above the $21.50 per share high, it could keep moving higher.

Still, with the stock showing few price changes, and the fundamentals not pointing in any direction, BILI stock could go either way at current levels.

The Bottom Line on BILI Stock

Investors need to put BILI stock on their watch lists. However, with the stock not offering any clear direction, investors should wait until after the report to buy. Wall Street forecasts the company will post higher losses on more revenue growth. Still, longer term, analysts expect that growth to take Bilibili into profitability by 2021.

For now, BILI stock posts no short-term signals to either buy or sell. It supports a P/S ratio that seems neither high nor low for a new growth equity. Moreover, it trades in the middle of its yearly range.

The earnings report could make it a buy, but investors should wait until after the company’s announcement to make a move. I expect BILI stock to become a long-term winner. However, as this is a new equity to most Americans, traders should focus on learning now and buying later.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.

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