Bilibili's Focus Shift On DAU, Cost Reduction Plan Wins Analyst Attention

Bilibili's Focus Shift On DAU, Cost Reduction Plan Wins Analyst Attention
  • Benchmark analyst Fawne Jiang maintained a Buy rating and $30 price target on Bilibili Inc BILI.
  • BILI reported largely in-line Q3 results
  • She expects growth challenges to persist in the close quarters, as macro headwinds will continue to take a toll on BILI's ad growth.
  • Uncertainties on game license approval and game launch schedule could hamper its games' outlook. 
  • The company has decided to shift its user and traffic focus to prioritizing DAU growth instead of MAU going forward. 
  • The shift should help to enhance user engagement and consequently open up commercialization opportunities. 
  • It could also give the company more wiggle room to optimize its S&M spending. 
  • Furthermore, management offered a sweeping cost and expense reduction plan and expected cost optimization and expense deduction Y/Y in FY23. 
  • As such, she moderately lowered the FY23 revenue growth projection, factoring in a gradual macro recovery, and raised earnings estimates based on better cost savings. 
  • Goldman Sachs analyst Lincoln Kong maintained a Neutral and lowered the price target from $25.6 to $22.2.
  • Barclays analyst Jiong Shao maintained an Equal-Weight and raised the price target from $13 to $16.
  • Price Action: BILI shares traded higher by 7.50% at $16.55 on the last check Wednesday.
  • Photo Via Company
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