What happened
Shares of many Chinese stocks rebounded today after several earnings reports and hopes that the Chinese government might loosen some of its "zero-COVID" restrictions.
Shares of the video streaming platform Bilibili (BILI -1.45%) had surged more than 23% as of 11:17 a.m. ET today.
Meanwhile, shares of the online recruiting company Kanzhun (BZ) traded nearly 14% higher, while shares of the digital freight platform Full Truck Alliance (YMM 1.44%) were up more than 12%.
So what
Chinese stocks and the broader market sank yesterday as protests over China's ongoing COVID-19 policies broke. Many residents are fed up with the restrictions, which have included broad and strictly enforced lockdowns in major cities and also cut into economic growth.
Today, Chinese officials seemed to take a softer approach, saying they would work to try and make sure the country's coronavirus policies had less of an impact on Chinese citizens.
Image source: Getty Images.
In other news, Bilibili this morning reported a net loss of more than $241 million for the third quarter on total revenue of more than $814 million, both numbers that beat analyst estimates.
The company also reported that daily active users surpassed 90 million, up 25% year over year, while average monthly paying users reached 28.5 million, up 19% year over year.
"In the third quarter, we took steps to shore-up our business foundation and narrow our losses, while continuing to provide users with the products and services they love," Bilibili CEO Rui Chen said in a statement. "Users remained highly engaged and the average daily time spent on Bilibili reached a 96-minute record high."
In the fourth quarter, the company is guiding for net revenue to be as high as $870 million, depending on market conditions.
Kanzhun also reported third-quarter results today, announcing adjusted net income of close to $53 million on total revenue of $165.7 million, both numbers that beat analyst estimates.
Average monthly active users grew 12.5% to 32.4 million, while total paid enterprise customers for the year ending Sept. 30 fell 7.5% to 3.7 million compared with the same time period in 2021.
"We delivered solid results in the quarter despite the challenging macro environment, once again demonstrating the resilience and effectiveness of our business model," Kanzhun's CEO, Jonathan Peng Zhao, said in a statement. "Our user base growth has rebounded back to its fast momentum."
For the fourth quarter, Kanzhun is guiding for total revenue to be as high as $150 million, reflecting the recent impact of the resurgence of COVID-19 in certain areas of the country.
Now what
Investor sentiment for Chinese stocks has been improving, but I think restrictive COVID-19 restrictions are going to keep coming and going in the near term, keeping volatility fairly high.
As they are mid-cap stocks, I think these three names will be more volatile than larger, more established Chinese stocks. But considering the large markets they operate in and their beaten-down share prices, I do think they could have long-term upside.
Just make sure to do the proper due diligence on the regulatory issues that could impact each one of these stocks, as regulation plays a bigger role when investing in Chinese stocks.
