Loop Capital Markets has initiated coverage of BlueCity Holdings Ltd. (Nasdaq: BLCT) with a 34% upside price target.
The U.S. investment management firm issued a “buy” on the recently-listed Chinese LGBTQ platform and a price target of $20 per share in a report Monday.
Loop Capital’s Laura Champine, director of research, noted the growing livestreaming trend, accelerated by the Covid-19 outbreak, as well as BLCT’s monetization opportunities and its position in an attractive niche.
“As Asian societies gradually become more open to the LGBT community, we expect more community members to reach out to their peers digitally,” Champine wrote.
Further, “The Blued app has more experience and more members than any other sizeable LGBTQ platform in Asia, and management knows how to make its users feel safe and connected. We believe the app’s rapid growth outside of China demonstrates the company’s ability to navigate in the fastest growing markets in Asia, including India, Vietnam, Thailand, and Korea.”
BueCity operates the largest LGBTQ online platform in Asia, Blued, counting more than 6 million active users as of March 2020. Of those, 42% are daily active users. While the majority of the users on the app are gay men, the company expects to expand its lesbian base. Loop Capital mentions the partnership with Rela, China’s top social lesbian network, as a possibility for the future.
In addition to social features, BlueCity offers various services including HIV awareness and prevention, medical consultation and health services, and family planning.
Loop Capital also noted the high user loyalty on Blued. “The platform is much stickier than most social networks, as LGBTQ community members are loyal to what is often their first gateway to the larger gay community,” the report stated.
The company lifted off in an $84.8 million initial public offering in early July, priced at $16 per share. After soaring above $35 per share on debut, it has slipped below IPO level, trading Tuesday morning at $14.69 per ADS.
BlueCity prepares to release its first financial report as a public company at the end of August.