Bilibili-W (09626) saw its stock price plummet 5.12% during Wednesday's intraday trading session. The sharp decline comes despite the company reporting robust first-quarter financial results, including a 62% year-on-year increase in adjusted net profit and gross margin rising for the 15th consecutive quarter.
Analysts point to valuation concerns as a key factor behind the sell-off. Despite the positive earnings, Bilibili trades at a premium P/E ratio of 47.5x, significantly higher than the industry average of 12.7x and peer average of 21.1x. With revenue growth forecasts at approximately 8.1% annually, investors appear concerned about paying such a high multiple for relatively modest growth expectations.
Additionally, the company's earnings call revealed that AI-related investments will lead to substantially higher expenses. AI-associated capital expenditures are expected to increase by approximately RMB 1 billion for the full year, with an estimated impact of around RMB 500 million on the income statement. While AI enhances Bilibili's competitive edge in content creation and advertising efficiency, the significant cost increases have raised concerns about future profitability margins.
