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Why Bilibili Stock Jumped on Monday

By Daniel Sparks - Jan 4, 2021 at 2:31PM

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The stock's gain on Monday extends a bullish run for the online entertainment company's stock in recent months.

What happened

Shares of China-based online entertainment provider Bilibili ( BILI 3.75% ) jumped sharply on Monday. The stock rose as much as 12.2% at one point during the trading day. As of 2 p.m. EST, the stock was up about 9%.

The stock's gain is likely due at least in part to its momentum toward the end of 2020, some of which has been triggered by strong operational results and a recent trade deal between China and the European Union.

A chart showing a stock price moving higher.

Image source: Getty Images.

So what

Shares of Bilibili have been on a tear since November when the company announced a 74% year-over-year increase in third-quarter revenue. This strong performance was driven by a 42% year-over-year jump in average daily active users and an 89% increase in average monthly paying users. 

The stock's momentum continued into the end of the year and has been extended into the beginning of 2021, following more recent news that the European Union and China finalized a deal to improve international trade and cross-border investment between the two markets.

The stock's big gain on Monday extends Bilibili's recent momentum.

Now what

Management believes these are still early days for Bilibili.

"As we leverage our core capabilities in providing engaging content and community experience, we are committed to further improving our brand equity and capturing this market opportunity," explained Bilibili CEO Rui Chen in the company's Nov. 18 third-quarter earnings release. "We believe the investments we are making now to increase our stronghold in China's entertainment market will yield considerable and sustainable return in the long run."

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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