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Chinese Tech Giant Launches $3B IPO On Nasdaq

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Bilibili, online entertainment platform for young generations in China, has raised $483 million in an IPO, putting its valuation at over US$3 billion, reports say.  

The company is the fourth Chinese company to list shares on U.S. exchanges in a week—even amid hotly intensifying trade war battles.

During its first trading session on Wednesday, shares were initially priced at US$11.50 but in the current market, which is unfriendly to tech, shares dipped as low as US$9.62 before rallying to close at US$11.24—down 2.26 percent from their start.

Morgan Stanley, BofA Merrill Lynch and J.P. Morgan acted as lead managers on the IPO deal.

The company’s CFO, Sam Fan, emphasized the uniqueness of the platform by saying that nothing quite like Bilibili exists in the U.S. or even China.

“We are quite unique, we don’t have a direct competitor in China… It takes time for the whole ecosystem to mature, that’s why we have strong leadership in the Generation Z,” Fan said.

Indeed, Bilibili, like many other internet companies, is targeting the next generation, those aged 15 to 20, also known as Generation Z or Post-Millennials.

And it’s all backed by huge Chinese money, including gaming giant Tencent.  

What began as a community for fans of anime, comics, and games has now evolved into an online entertainment behemoth that lets users stream videos, watch and upload live broadcasts, play mobile games and interact with one another. On average, each user spends an impressive 76 minutes a day on the app.

Revenue clocked in at $379.4 million in 2017, 372% higher than the $80.4 million it rang up a year earlier. Bilibili is still not profitable, but net losses narrowed substantially last year. Just 1.1 million of its users were paying members at the end of last year, some 1.5% of its base of monthly active users. Related: Millennials Are Waiting For The End Of Capitalism

For today’s tech IPOs, it’s not about profit at this stage—it’s about narrowing losses.

The phenomenon of Chinese companies listing on U.S. exchanges through American Depository Shares seems to be catching on, with last year’s total being the most since 2010, recording 21 new listings by Chinese companies on U.S. exchanges.

On Wednesday, Netflix-style video streaming service iQiyi, raised $2.25 billion with an initial public offering that priced roughly 125 million shares at $18. It presents the largest Chinese offering since Alibaba in 2014.

Some 175 Chinese companies are currently trading in the U.S., 70 of which are internet and technology companies.

Success hasn’t always been guaranteed, however.

Last month, fitness tracking vendor Huami completed a $110 million IPO on the NYSE. Since going public at $11 per share, Huami is now trading slightly below its offering price.

It is still early to say whether Bilibili will have better results, considering the massive competition in the industry, both gaming and streaming, coupled with high-level trade tensions between the U.S. and China that has a strong focus on the tech industry.

Investors will be watching to see whether future tariff announcements coming out of the White House complicate things for Bilibili.

Bilibili is looking at an astounding 5x growth rate, but investors aren’t looking for risk right now and it’s not clear that it has the financials to sustain this—even with the post-Millennial obsession.

By Jan Bauer for Safehaven.com

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