Chinese Video Sharing Website BiliBili Suffers in Homecoming Debut
- By Graham Griffin
Chinese video sharing website BiliBili Inc. (NASDAQ:BILI) debuted for trading on the Stock Exchange of Hong Kong and closed below its listing price. According to Reuters, the first day of trading on the exchange is the worst seen by any major company in the last six months.
Increasing scrutiny by the Securities and Exchange Commission has evolved into plans to delist any foreign companies that do not meet U.S. auditing standards. This has led many Chinese companies to seek additional exchanges to be listed on. By joining these additional exchanges, companies like BiliBili are safeguarding themselves against the potential delisting from U.S. exchanges and are gaining influence among China and Hong Kong-based investors.
For many of these new "homecoming" listings, a lack of excitement from investors has led to lackluster results. Prior to BiliBili's launch in Hong Kong, Yum China Holdings Inc. (NYSE:YUMC) had seen the worst initial performance with shares dropping 6.3% on its debut day according to Refinitiv data. BBC News reported that BiliBili failed to achieve the expected $3 billion after pricing shares at $104 last week.
As of March 29, the stock was trading at $102.91 per share with a market cap of $36.15 billion on the Nasdaq Stock Market. According to the GF Value Line, the shares are significantly overvalued.
GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rank of 1 out of 10. There are currently no warning signs issued for the company. The poor profitability rank comes in part from a negative operating margin and the weighted average cost of capital has consistently destroyed value over the last several years.
Top gurus invested in BiliBili (NASDAQ:BILI) include Jim Simons (Trades, Portfolio)' Renaissance Technologies, Jeremy Grantham (Trades, Portfolio), Ray Dalio (Trades, Portfolio)'s Bridgewater Associates and Andreas Halvorsen (Trades, Portfolio).
Disclosure: Author owns no stocks mentioned.
Read more here:
Tesla Rival Nio Halts Factory Amidst Chip Shortage
Carl Icahn Resets Tenneco Holding
Value Investing Live Recap: Kovitz's Core Equity Strategy
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
This article first appeared on GuruFocus.
