Where Will Bilibili Stock Be in 5 Years?

Bilibili (NYSE: BILI) runs a video sharing website that’s been called the Chinese YouTube, but the company’s platform allows members to do more than post videos. Users can interact with content in real-time, posting comments that show over the video. While the company initially focused on anime, comics, and gaming (ACG), Bilibili has now branched out to cover a variety of topics.

BILI shares hit a high in early 2021 when the stock traded over $150. But investors sold off in droves in 2022, and the stock struck bottom at $8.95 in late 2022. Even though BILI bounced back from that low point, the stock is still down over 40% year-to-date to where it’s currently trading around $16.

Investors lost faith in the company due to challenges from a tough economic climate in China, strict COVID restrictions that took a toll on Bilibili, and heightened government regulations on internet and social media companies.

The company has also faced stagnant revenue growth and losses that caused many investors to shy away. But there are signs that sales may pick up, and the Chinese economy seems poised to shake off the downturn.

So where will Bilibili stock be in 5 years?

What Does Bilibili Do?

Bilibili is known for it’s video sharing website, but the company operates through 4 separate segments: Mobile Games, Advertising, Live Broadcasting and Value-Added Services (VAS), and IP Derivatives and Others. 

The company’s VAS segment is by far the most profitable, accounting for $314 million, or 42.5% of Bilibili’s $732.8 million in revenue in the first quarter of 2023. That was a 5% year-over-year increase from 2022. This division includes sales from Bilibili’s premium subscription tier and sales of virtual items and paid content through the company’s platform. 

Advertising includes revenue from ads displayed during video content and affiliate marketing. It was the next most profitable for Bilibili in the 1st quarter, bringing in 25%, or $185.2 million, of the company’s revenue. Ad revenue was a 22% increase from the 1st quarter of 2022.

But revenue from Mobile Games dropped by 22% in the 1st quarter to $164.8 million. The company attributed the decline in gaming sales the lack of a new game launch in the first quarter.

The IP Derivatives and Others segment sells merchandise related to the ACG sector. The business unit’s 1st quarter sales of $74.3 million was a 15% decrease from 2022, attributed to decreased demand for the company’s products.

How Popular Is Bilibili In China?

Bilibili currently has 93.7 million users, an 18% increase from the number of subscribers the company had in 2022. And the company has built a passionate and loyal fanbase among younger users, Gen Z in particular.

The popularity is due to the company’s unique model, where users make “bullet comments”, comments that shoot in from the side of the screen and are visible to the community, over video content.

This interactive model has been critical in keeping users engaged in the company’s content for long periods of time, an average of 96 minutes per day.

Is Bilibili Undervalued?

When a popular stock has dropped as far as BILI, over 89% from its high point just a few years ago, it can certainly appear undervalued. But the company’s net revenue was nearly flat from last year, with 0.3% increase from 2022. And it posted a net loss of $91.7 million in the 1st quarter.

But that loss was a 72% improvement over the net loss in the same quarter of 2022, and an improvement from last quarter as well. With strong sales increases in the VAS and Advertising segments, many analysts forecast the company is poised to turn it around if the Chinese economy recovers.

BILI is trading at around 2 times sales at the current price, which is sign that the stock is undervalued. 

Bilibili Stock Forecast This Year

The company hasn’t changed its guidance for 2023 as of the first quarter. It still expects total-year revenue to top 2022 by 11% to 19%.

Analysts are a bit more cautious, expecting around a 10% sales increase from Bilibili by the end of the year.

That means the stock is likely to trade even for 2023, barring a massive economic recovery in China over the next few months.

Bilibili Stock Prediction Next Year

While 2023 may not deliver the growth BILI investors want, analysts are bullish that the stock will pick up over the next year.

Out of 44 analysts who have given ratings on BILI, 33 believe the stock is a buy, with 3 analysts predicting BILI shares will outperform the market.

The most bullish analyst has the stock soaring 115.2% to $34.51. The median analysts’ prediction sees Bilibili shares jumping 41.5% to $22.69. But there are 8 hold ratings on the stock, and 3 sell ratings. The most bearish forecast has the stock dropping 23% to $12.35.

Where Will Bilibili Stock Be In 5 Years?

Bilibili has leveraged its popular video sharing model to establish a corporation with a $6.5 billion market capitalization. The company’s shares skyrocketed in 2021 as investors bought into Bilibili’s remarkable opportunity for growth.

But economic headwinds have slowed the company down and led to decreased revenue and net losses.The Chinese economy and strict government regulations on media companies will have a significant effect on whether the stock will be able to bounce back over the next 5 years.

While there are signs that the company may be turning it around, there are a lot of challenges that stand in the way of Bilibili shares trading above $100 again. Even though many of those challenges are outside of the company’s control, investors should keep them in mind before investing in BILI.

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