Home Consumer debt Why Bilibili’s stock is down almost 15% today

Why Bilibili’s stock is down almost 15% today

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What happened

Shares of Chinese digital entertainment website operator bilibili (NASDAQ: BILI) are down 14.9% as of 12:01 p.m. ET on Thursday after the company announced plans to raise funds by issuing new convertible debt.

So what

For the second day in a row, Bilibili shares are battered. The stock fell 9% on Wednesday after the company reported mixed numbers for the third quarter and disappointing revenue guidance for the current quarter. Today’s most dramatic drop stems from news that the company plans to issue $ 1.4 billion in notes or debt that can be converted into company stock.

Image source: Getty Images.

As a perspective, Bilibili’s current market cap stands at $ 26.7 billion, and the company’s current balance sheet indicates that it already manages just over $ 1.2 billion in long-term debt. . It had $ 808 million in business last quarter and $ 2.1 billion in the first three quarters of the year.

Now what

The decision to raise funds by issuing convertible debt is obviously far from ideal for existing shareholders. The timing of the announcement, however, may have more to do with Thursday’s sharp drop than the announcement itself. Investors have already been shaken by yesterday’s earnings report, leaving the stock excessively vulnerable to any potentially problematic news today.

The two-day rout, however, ultimately benefits potential buyers who have been waiting for the opportune moment to intervene. That’s all.

Of course, China has cracked down on most of its consumer-oriented tech companies this year, slashing the peak value of Bilibili reached in February by more than 40% ahead of Wednesday’s quarterly earnings report. However, there is not much that regulators across the country could do to further disrupt the company’s operations, making the halving since the February summit a good entry opportunity.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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