Bilibili Inc. (BILI) Mentioned Negatively at Morgan Stanley, 'We believe the share price will fall relative to the industry over the next 60 days'
Bilibili Inc. (NASDAQ: BILI) Mentioned Negatively at Morgan Stanley.
Analyst Alex Poon comments "We believe the share price will fall relative to the industry over the next 60 days. This is because the stock has traded up recently, making short term valuation much less compelling.Bilibili's stock price has rebounded ~50% since May 24 (KWEB +28%) while risks for key fundamental metrics (advertising,games,gross margin) skew towards the downside for the rest of 2022, in our view. Assuming 10% net margin on our 2025 revenue estimate, the current price implies ~20x 2025e P/E, more expensive than most peers. Relative to Kuaishou, Bilibili's 2022e P/S of 3.5x is on par despite Bilibili's lower gross margin at 15% in 2Q22E vs. Kuaishou's 42% and Bilibili's break-even in 2024E vs. Kuaishou's China segment break-even in 4Q22E. We estimate that there is about a 70% to 80% (or "very likely") probability for the scenario. Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the scenario."