What happened

Shares of Bilibili (BILI -0.94%) were falling today on news that the Chinese online entertainment company did not have one of the 45 video games that received a license from the Chinese government yesterday. Today's sell-off comes after a pop yesterday on reports that Beijing was issuing the licenses, though it was unclear at the time if Bilibili was included.

After the stock gained 7% yesterday, the stock was down 10.3% as of 3:10 p.m. EDT.

Two young people playing on smartphones while sitting on a couch with plates of food in front of them.

Image source: Getty Images.

So what

A number of Chinese tech stocks jumped yesterday on the news as it was the first time in eight months that the National Press and Publication Administration had approved new games.

The list of 45 titles did not seem to include any of Bilibili's games, though some investors see the thaw as a promising sign that should lead to more games being approved.

The Chinese government had cracked down on video games as part of its policy to restrict unhealthy cultural influences and what it sees as addictive behavior in video games. It had even restricted minors to just three hours of games a week, only for an hour each on Friday, Saturday, and Sunday, but it may be stepping back from that strict policy.

Now what

Like other Chinese tech stocks , Bilibili has collapsed over the last year, down 77%, but the business is still growing briskly as revenue jumped 61% in the most recent quarter and its user base grew by 35%.

Those numbers indicate that Bilibili hasn't been struggling with the video game crackdown. Although the company is still unprofitable, the stock should rebound if investor sentiment shifts. As China's regulatory framework starts to normalize, look for Bilibili stock to see at least a modest recovery.