Bilibili Drops as Much as 7% in Hong Kong Debut

The listing comes amid intensified tensions between Washington and Beijing.
Anthony RussoMar 29,2021,14:57

Bilibili (Nasdaq: BILI; HKEX: 09626) slumped as much as 7% in its Hong Kong debut Monday, as investors in the city continue to shy away from Chinese U.S.-listed stocks amid escalating trade tensions between Beijing and Washington.

The Chinese online entertainment giant raised HK$20.2 billion ($2.6 billion) through the sale of 25 million shares priced at HK$808 each. After dropping early in the day, the stock recovered to HK$800 per share by close, 1% below the offering price.

Still, that marked the worst performance by a major listing in Hong Kong since fast-food giant Yum China (NYSE: YUMC; HKEX: 09987) completed its debut in the city, raising more than $2 billion.

The month of March has seen tensions between the U.S. and China worsen. For one, U.S. and Chinese officials reportedly exchanged verbal attacks in Alaska. On top of that, the U.S. Securities and Exchange Commission has just adopted interim final amendments to implement measures under the Holding Foreign Companies Accountable Act, a bill signed into law by President Joe Biden’s predecessor in late 2020 that could delist Chinese companies from the U.S. exchanges if they refuse to comply with auditing standards.

The move caused a major slide among U.S.-listed Chinese stocks last week. And it continued into Monday: Tech giant Baidu (NYSE: BIDU; HKEX: 09888), which completed its $3.1 billion secondary Hong Kong listing last week, is now down 19% from its offering price of HK$252 per share.

This month, U.S. shares of Bilibili have fallen 22% to date. However, early on Monday, Bilibili was up 7%.

Chen Rui, the chief executive officer of Bilibili, told Bloomberg Television that he isn’t concerned about the underwhelming debut in Hong Kong today.

“We wouldn’t care too much about short-term performance in the stock market,” Rui said.

He added, “Nobody will remember whether your stock went up or down on the debut in 10 years’ time.”

Established in 2009, Bilibili provides livestreaming, videos, and gaming. The company now counts more than 200 million monthly active users. Among its investors are Tencent Holdings (HKEX: 00700; OTC: TCEHY), Sony (NYSE: SNE), and Alibaba Group (NYSE: BABA; HKEX 09988). According to filings, Alibaba now controls 8% of the equity in Bilibili after buying more than a third of the stock in the offering.

Bilibili plans on using the bulk of the funds from the listing to boost content offerings and support its creators.

Topics:Bilibili, Alibaba Group, Sony, Baidu, Yum China, Tencent.