Bilibili (BILI) Stock Drops 18% on Q2 Earnings Miss

  • Video-sharing platform Bilibili (BILI) suffered a steep drop in the market.
  • The company delivered an earnings miss for its fiscal second quarter.
  • BILI stock also suffered from a disappointing sales forecast for Q3.
BILI stock - Bilibili (BILI) Stock Drops 18% on Q2 Earnings Miss

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Shanghai, China-based video-sharing platform Bilibili (NASDAQ:BILI) added to the sector’s woes with a lackluster performance for its fiscal second-quarter earnings report, sending BILI stock down into the abyss. As well, a disappointing sales outlook for Q3 convinced stakeholders to rush for the exits.

Adjusted for non-recurring items, Bilibili posted a loss for earnings per share of 75 cents. This tally missed the consensus target of a loss of 67 cents. Not only that, the latest result compares unfavorably to the EPS loss of 35 cents in the year-ago quarter. According to Zacks Equity Research, over the last four quarters, Bili surpassed consensus EPS estimates two times.

On the revenue front, the video-sharing firm posted $743.24 million. This figure did surpass the consensus target by nearly 1%. Further, the tally beat out the year-ago period’s sales haul of $696.23 million. Interestingly, out of the last four quarters, Bilibili topped Wall Street’s consensus target three times.

However, that bit of joy didn’t last long. According to MarketWatch, for fiscal Q3, “the company expects revenue of between RMB5.6 billion and RMB5.8 billion, below the FactSet consensus of RMB5.96 billion.” Nevertheless, the pessimism for streaming-related businesses isn’t surprising considering the sector giants’ lackluster financial performances.

BILI Stock Raises Eyebrows

Despite the uninspiring Q2 results, management put on a brave face. “Confronting the immense challenges of the macro-environment and COVID-19 lockdowns in the second quarter, we are pleased to have continued to grow our high-quality user base and control our expenses,” said Rui Chen, Bilibili’s chairman and CEO.

Chen has legitimate reason for optimism. For instance, average monthly active users (MAUs) reached 305.7 million, a 29% increase from the same period in 2021. Average monthly paying users (MPUs) reached 27.5 million, a 32% year-over-year lift. Nevertheless, by the latter end of the afternoon session, BILI stock slipped over 17%.

Indeed, management likely needs to take its strategic goals and push them into overdrive. On a year-to-date basis, BILI stock now finds itself down 57%. According to ForeignPolicy.com, China’s “endless cycle of lockdowns” related to Covid-19 could “lead to long-lasting political and economic consequences.”

Recently, China extended its Covid-19 lockdown of megacity Chengdu, with CBS News reporting no end in sight for strict zero-COVID measures. While broadly negative, such measures should cynically bolster BILI stock under the “hostage audience” thesis.

To be sure, Bilibili enjoyed a dramatic revenue surge in 2020 and 2021. However, the previously meteoric growth rate appears to be slowing. As well, the company continues to expand net losses, posing challenges for investors seeking shelter from market ambiguities.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


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