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Why Bilibili Stock Fell 12% Last Month

By Keith Noonan – Updated Oct 8, 2020 at 8:37AM

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The stock has quickly bounced back and is now up 156% year to date.

What happened

Shares of Bilibili (BILI 22.00%) slumped 12% in September, according to data from S&P Global Market Intelligence. The Chinese video game and social media stock lost ground amid a pullback for the broader market.

^SPX Chart

^SPX data by YCharts

Bilibili stock set a record high early in September following news that the company had signed an agreement to acquire a 9.9% stake in entertainment and streaming company Huanxi Media. However, market volatility spurred by coronavirus-related pressures prompted sell-offs for many growth-dependent tech stocks, and Bilibili shares closed out the month down double digits. 

A person looking at a mobile phone.

Image source: Getty Images.

So what

In addition to selling pressures impacting the broader market in September, Bilibili may have also seen sell-offs related to a ratings downgrade from BidaskClub. The investing group published a note downgrading its rating on the Chinese gaming and social media stock from a buy to a hold on Sept. 26.

Now what

Bilibili stock has regained ground in October, with the company's share price now up roughly 12% in the month so far. 

BILI Chart

BILI data by YCharts

News hit on Oct. 6 that the company was gearing up to launch a secondary stock listing on the Hong Kong Stock Exchange (HKEX) next year. Bilibili is reportedly looking to raise as much as $1.5 billion with the new stock offering.

Many Chinese tech companies with U.S.-listed stocks have signaled interest or made moves to list on the HKEX over the last year. While the new listings and share offerings can boost excitement and help companies raise funds, they have also significantly diluted stock and hurt shareholder value in some cases. Bilibili's business has been posting strong momentum, but a major new share offering could be a major catalyst for the stock -- for better or worse. 

Bilibili has a market capitalization of roughly $16.5 billion and is valued at 9.9 times this year's expected sales. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bilibili. The Motley Fool has a disclosure policy.

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