Chinese Video App Slumps On Hong Kong Debut

Shares in Bilibili, a YouTube-like Chinese service, fell on their market debut in Hong Kong amidst a broader sell-off in Chinese tech shares.

Bilibili, which has a fast-growing user base amongst largely younger viewers, saw its shares close 1 percent down on their opening day on Monday after a drop of nearly 7 percent during the day.

The company is the latest US-listed Chinese firm to opt for a secondary listing in Hong Kong, after US regulators began placing stricter controls on Chinese listings.

The new controls, which began under the previous US administration, has already seen proceedings begin to delist three Chinese telecommunications companies.

Market slump

The New York Stock Exchange in January suspended state-backed telecoms firms China Telecom, China Unicom and China Mobile.

Chinese companies’ secondary listings have often failed to generate the same enthusiasm from investors as other tech offerings.

Baidu closed unchanged on its first day of trading in Hong Kong last week and has since dropped 19 percent, while e-commerce giant JD.com also held a lacklustre secondary listing last year.

Bilibili priced its shares at $104 (£75) last week and raised $2.6 billion, short of the $3bn it was seeking, making it the weakest major Hong Kong offering since last September.

The company has 200 million Chinese users and is backed by both Tencent and Alibaba.

That’s unusual in a market where tech firms usually align themselves with one of the tech giants or the other.

Online video

Bilibili said it would use the takings to invest in content as it anticipates huge growth in adoption of online video over the coming years.

The site started as a video-sharing platform, but has invested half a billion dollars into broadcast rights since 2018 and is looking to expand its user base of paying subscribers.

It offers live-streaming, e-commerce and game publishing, currently its largest source of revenue.

The company is loss-making, with a net loss for the December quarter more than doubling to 843.7m yuan (£93m) on growing marketing costs.

But revenues have nearly tripled since 2018 and its user base grew 55 percent year-on-year to 202 million monthly average usres in the final quarter of 2020.

The company said it currently has 14.5 million paying subscribers and is using premium content to attract more paying users.

It said it expects revenue to grow at least 73 percent year-on-year to 3.7bn yuan this quarter, as it aims to double monthly active users over the next two years.