Should You Think About Buying Bilibili Inc. (NASDAQ:BILI) Now?

By
Simply Wall St
Published
April 12, 2022
NasdaqGS:BILI
Source: Shutterstock

Today we're going to take a look at the well-established Bilibili Inc. (NASDAQ:BILI). The company's stock saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Bilibili’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Bilibili

What's the opportunity in Bilibili?

According to my valuation model, Bilibili seems to be fairly priced at around 6.1% below my intrinsic value, which means if you buy Bilibili today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $29.36, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Bilibili’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Bilibili generate?

earnings-and-revenue-growth
NasdaqGS:BILI Earnings and Revenue Growth April 12th 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Bilibili's earnings over the next few years are expected to increase by 66%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in BILI’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on BILI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example - Bilibili has 2 warning signs we think you should be aware of.

If you are no longer interested in Bilibili, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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