To The Moon

Chinese Stocks suffers this year in secondary market, esp those growth technology stocks. Under pressure of strong dollar, global inflation and recession, it's not the growths' aage.

$Bilibili Inc.(BILI)$ is a typical growth company. At the end of 2021, it still confirmed that "profit leaves, second, but growth is the most important". But under current environment, The decline of growth rate has also become a reality, and the secondary market has also severely punished the weak growth stocks.$BILIBILI-SW(09626)$

Obviously, Q2 earnings miss, market is and will punish it.

• Q2 revenue was 4.908 billion yuan, up 9.2% year-on-year, which was the first time in Bilibili's history that it dropped to single digits, which was basically the same as the market expected consensus of 4.905 billion yuan.
• Among them, the game revenue was 1.046 billion yuan, down 15% year-on-year, which was the second decline after the first decline in the same period last year, and also lower than the market expected consensus of 1.079 billion yuan; The income from value-added services was 2.103 billion yuan, a year-on-year increase of 29%, slightly lower than the market expected consensus of 2.121 billion yuan; Advertising revenue was 1.158 billion yuan, a year-on-year increase of 10%, slightly higher than the market expected consensus of 1.136 billion yuan; Revenue from e-commerce and other businesses was 600 million yuan, up 4% year-on-year, which was slightly higher than the market expectation consensus of 583 million yuan.
• The cost was 4.17 billion yuan, a year-on-year increase of 19%, so it also made The overall gross profit margin fell to 15.04%, the lowest since Q2 2019.
• The sales expenses were 1.172 billion yuan, down 16% year-on-year, and the decline exceeded market expectations.However, the content cost, R&D expenses and management expenses all exceeded market expectations, so the overall operating loss was less than expected.
• The diluted loss per share was 4.98 yuan, which was worse than the market expected loss of 4.37 yuan.

For Q3, company's revenue guidance is 5.6-5.8 billion yuan, while market consensus is 5.91 billion yuan.

In a word, a huge miss.

Users in Bilibili are "believers" , it has been recognized by a large number of investors. However, in the current environment, its growth has also changed, and there is no hope of profit at all.

From the top line

Can active users or creators in Bilibili bring greater value?

The MAU of Bilibili Q2 reaches, DAU is, the ratio of DAU/MAU is continuously maintained at about 27%, and the activity of users is still quite high. As paying users include value-added service users who buy games and members, the total number of paying users is 27.5 million, and the payment rate reaches 9.0%. Activity increases, But it didn't help the monetization, and ARPU dropped to 16.06 yuan, the lowest since Q3 2020.

Of course, Q2 has some special reason. game serious numbern number is limited, and logistics is affected.Therefore, the game and e-commerce business have different degrees of distortion Among them, games have a greater impact, while e-commerce has exceeded market expectations to a certain extent. Since July, Bilibili has obtained the new version. It is expected that the game business will improve in the second half of the year, but the whole game business is unlikely to grow as before.

Value-added services will bring more subscribers through more excellent content, especially OGV.

Do you want to continue to insist on "user experience" and give up patch advertisements like Youtube??

Live broadcast and value-added service is the content realization business of the company, and it is also the business with the largest contribution to the company's revenue at present. The revenue of Q2 business exceeded expectations. On the one hand, the company promoted the transformation of UPmaster into anchor and introduced more external anchors; On the other hand, more new dramas (new fans) attracted potential users.

Bilibili's user-friendly strategy has always kept the whole community active enough, but it has also reduced the opportunity of monetization to a certain extent. The weakness of advertising business has been an industry fact. Although Bilibili has performed well among all advertising companies, whether it can open up more revenue methods has always been the concern of investors.

If Q2's revenue is affected by special events, how can it explain that Q3's guidance still worse than market consensus?

From the bottom line

Where is the limitation of content support?

The company said that it should spend all its money on the core "video content" and "user growth", but bilibili also began to adjust the support ratio for up main content. At present, creators below the middle waist are gradually looking for more ways to realize their cash, and the future content creation will focus on more specialized PUGV and OGV. This is the trend of short and medium video websites created by all users. Bilibili has also enhanced its monetization ability through Story-Mode. Because the advertising price of Story Mode is higher than that of other video scenes, it is possible to continue to reduce subsidies to video owners and further increase gross profit margin in the future.

Of course, whether it admits it or not, Story is actually a mode in which bilibili succumbs to short videos, and the monetization efficiency of short videos is indeed high at this stage.

When to focus on profitability?

Similar to most other Internet companies, Bilibili also reduced its marketing expenses. However, the operating costs, R&D expenses and management expenses still exceeded market expectations this quarter. From Bilibili's own point of view, the user cost calculated by marketing cost has been reduced,However, from another angle, the user's "maintenance cost" (reflected in management, research and development, content cost) has increased. Therefore, how to "retain" customers at a lower cost has become an important issue for Bilibili to expand its customers.

According to the management, the current goal is to reach 400 million MAU users by 2024. It means that considering profit is not the present thing.

As for whether we are too obsessed with achieving the user growth target and give up too many other opportunities, this is one of the core differences between the perspectives of investors and management.

One of the difficulties in investing in bilibili is that it is difficult to value.

In fact, it is not impossible to value, or because the company is still in the stage of bold expansion, which makes it uncertain whether it is through peer comparison, discounted cash flow in the future, or especially forward-looking multiple comparison.

If there is a big bull market in growth stocks, investors can buy them with their eyes closed. But not now. Once risk aversion begins to dominate the market, Investors demand the safety and efficiency of money.

With the current situation in bilibili, bargain-hunting is not necessarily an efficient use of funds. Of course, if you want to rebound the performance of Q3, you can also consider it. In the case of a strong US dollar, shorting non-US dollar assets is also a hedging means used by many hedge funds.

For many investors who hold bilibili but are still in "losses", "covered CALL" could be the most efficient method.

While holding positions, selling the same amount of Sell Covered CALL is more suitable for BILI, a target with relatively high implied volatility. And how to choose the right CALL to Sell, there are also some tips.

As we all know,

• The CALL on the day of soaring opening, will have premium;
• The time value of CALL with a maturity date of about 30 days decays the fastest.

Therefore, for friends who have not yet opened a position, you canUse the "price reminder" function in the software when the price increase on a certain day exceeds a certain value (such as 5%)It's a good time to Sell covered CALL, and it's best to choose a 30-day (or longer) CALL.

In addition, if you study the change of option price, you mayUsing the option price calculator in the trading software, you can manually set a limit order of the target priceChoose the selling price of CALL that you think is appropriate.

In a word, for BILI, which can't see the hope of recovery for the time being, investors should learn to make use of the accumulation to increase their own profits.