On Friday, Bilibili Inc . (NASDAQ:BILI) received an upgrade from Barclays (LON:BARC) from Underweight to Equalweight, accompanied by a price target increase to $14.00 for the shares, up from the previous $10.00. The revision follows Bilibili's first-quarter revenue report, which exceeded expectations with an 11.7% year-over-year increase.
This growth was attributed to a significant rise in advertising revenue by 31% and value-added services (VAS) by 17%, despite a 13% decline in mobile gaming revenue.
Bilibili also reported achieving a record number of daily active users (DAUs), reaching 102 million, alongside an average daily time spent of 105 minutes per user. The company's gross margin improved notably, reaching 28.3%, which represents an increase of 650 basis points compared to the same period last year.
The company's management has provided guidance that anticipates continued quarter-over-quarter improvements in gross margin. Additionally, Bilibili has reaffirmed its goal of reaching an adjusted operating income breakeven point by the third quarter of 2024. Barclays highlighted the significance of this target, noting that Bilibili has been the only unprofitable Chinese internet company covered by the firm.
The upgrade to Equalweight reflects Barclays' recognition of Bilibili's substantial progress towards achieving profitability. With the company's breakeven point now in sight and the firm's high confidence in Bilibili's financial trajectory, the stock's price target has been adjusted to reflect these developments.
InvestingPro Insights
As Bilibili Inc. (NASDAQ:BILI) continues to navigate its path toward profitability, real-time data and insights from InvestingPro can offer further context to investors monitoring the company's performance. Bilibili's market capitalization stands at $5.67 billion, reflecting the scale of its operations within the entertainment industry. Despite a challenging environment, the company has demonstrated resilience with a gross profit margin of 24.16% over the last twelve months as of Q4 2023.
InvestingPro Tips highlight that Bilibili holds more cash than debt on its balance sheet, which is a positive sign for financial stability. Additionally, the company has shown a strong return over the last three months, with a price total return of 37.13%. This could signal investor confidence in the company's recent strategies and market performance. However, it's worth noting that analysts have revised their earnings downwards for the upcoming period, and they do not anticipate the company will be profitable this year. For investors looking to delve deeper into Bilibili's financials and future prospects, there are 8 additional InvestingPro Tips available at Investing.com/pro/BILI. To access these insights, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
The recent upgrade by Barclays aligns with some of the positive trends observed in Bilibili's financial metrics, yet the InvestingPro data also points to areas where investors should exercise caution, such as the company's current lack of profitability and the recent negative adjustments in earnings forecasts. By balancing these data points and tips, investors can make more informed decisions about their interest in Bilibili's stock.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.