Hook / Thesis
Bilibili is no longer just a niche video community for anime and gaming fans - it's a broader Chinese online entertainment platform that is finally beginning to demonstrate scalable monetization. Recent quarters show profit contributions from gaming and a rebound in advertising, while corporate actions this year materially cleaned up part of the convertibility and hedging overhang. At today's price (ADS ~ $24.95), investors can establish a position that captures a reopening of valuation as execution and macro conditions stabilize into 2026.
Why this is tradeable now: the company has delivered sequential improvements on the revenue mix (ads + games), completed a sizable convertible notes and hedging transaction in 2025, and the news cadence through Q3 2025 suggests durable margin recovery rather than a one-off. That combination - operational upside plus lower capital-structure uncertainty - creates a favorable risk/reward for a position trade into 2026.
What Bilibili does and why the market should care
Bilibili Inc. American Depositary Shares (BILI) operates a diversified online entertainment platform originally built around long-form video, ACG (anime, comics, games) and Gen Z cultural content. Over time the site has expanded content verticals and product offerings to broaden user demographics and monetization channels. For investors, two fundamental drivers matter:
- Monetization expansion: Advertising recovery and better ad formats / targeting can translate directly into higher ARPU for an engaged, younger audience.
- Gaming & IP leverage: Mobile game revenue (and related IP licensing) tends to be lumpy but highly profitable when titles scale; recent commentary and press point to games contributing to rising profits.
Both drivers are on display in company releases during 2025. The firm announced quarterly results on 05/20/2025, 08/21/2025, and 11/13/2025, and third-quarter commentary (press coverage 08/22/2025) explicitly called out rising profit from games and ads. Those are the levers that should matter to multiple expansion or earnings re-rating into 2026.
What the public filings and news tell us (numbers and capital actions)
Key, verifiable datapoints from company announcements and filings in 2025:
- Q1 2025 results released on 05/20/2025 and Q2 results on 08/21/2025; Q3 results were announced on 11/13/2025.
- On 05/23/2025 the company completed a US$690 million convertible senior notes issuance and an offering of Class Z ordinary shares tied to hedging transactions; a related repurchase/hedge package was announced in the same timeframe.
- On 06/13/2025 the company announced completion of the repurchase right of its 1.25% Convertible Senior Notes due 2027 - a sign the company actively managed the convert structure.
- Press coverage on 08/22/2025 noted rising profit driven by games and advertising.
Operationally, the press notes and earnings cadence point to improving profitability and healthier unit economics. Financial statement detail is not included in the dataset I have here, but the cadence of announcements and explicit language around games/ads moving from investment to profit is a clear directional signal.
Price & market context
The ADS is trading at roughly $24.95 (latest snapshot: day high $25.43, low $24.70, volume ~1.65M). The shares moved from mid-teens earlier to multimonth highs in the low-30s during 2025, indicating the market has already priced a range of scenarios. Today’s price sits inside that recovery range, offering a tactical entry between recent support and resistance bands.
Because shares outstanding and market-cap are not shown here, I am framing valuation qualitatively: the market has demonstrated willingness to pay low-30s on a renewed growth/profitability narrative, and re-attaining those levels (or higher) would require continued ad traction and repeatable gaming hits. Conversely, the mid-teens suggest the downside if monetization stalls.
Catalysts to drive upside into 2026
- Advertising recovery and ad product improvements: incremental ARPU upside as ad spend in China normalizes and as Bilibili improves targeting and ad formats.
- Games portfolio momentum: continued profit contribution from mobile titles or new hit releases that shift segment margins higher.
- Capital-structure clarity: completion of convertible-note-related transactions in mid-2025 reduces immediate dilution uncertainty and hedging volatility.
- Operational cost discipline: if management sustains expense control and content ROI improvements, margin expansion could be sustainable.
- Earnings cadence and market sentiment: positive sequential prints (Q4 2025 into 2026) will likely re-rate the stock toward prior highs.
Trade plan - actionable, with entry, stop, targets
Base case stance: long (position) — directional exposure into 2026, size depending on risk tolerance and portfolio concentration.
Entry zone: $23.50 - $26.50 (establish gradually; better fills below $25)
Initial stop: $21.00 (strict; ~15-16% below current price)
Target 1 (near-term, 3-6 months): $32.00 (about +28% from $25)
Target 2 (if catalysts confirm, into 2026): $40.00 (about +60% from $25)
Position sizing: risk no more than 2-3% of portfolio value to initial stop; scale up on confirmatory prints or material positive catalysts.Rationale: the stop sits below a clear support area from recent trading and limits downside if ad/gaming tailwinds stall. Targets are layered: first target reclaims the mid-2025 highs and reflects a re-rating to prior multiples; second target assumes sustained execution and multiple expansion with profitable growth.
Risks and counterarguments
Below are the main risks to the thesis and at least one counterargument that could keep the shares depressed.
- Macro / ad market risk: China advertising spend can be cyclical. A weaker ad market would cut ARPU and stall the monetization thesis.
- Gaming volatility: mobile games are hit-driven. If upcoming titles underperform or revenue is lumpy, profit will be short-lived.
- Regulatory / policy risk: Chinese tech remains exposed to periodic regulatory intervention which can affect user growth, monetization and content licensing.
- Residual dilution and hedging: although the company completed convertible-note related transactions in 2025, future financings or outstanding hedge unwind could be dilutive or create downward pressure.
- Execution risk: improving margins in press releases need to convert into consistent cash flow; otherwise the market will discount the gains aggressively.
Counterargument: The improvement in profit could be cyclical or one-off (a few games performing well temporarily) and not durable. If ad spend weakens or new games don’t repeat success, the stock could revert to the low-teens to mid-teens range the market assigned earlier.
What would change my mind
I would materially downgrade this idea if any of the following occur:
- Management signals a renewed pullback in ad monetization or reverses cost discipline on content spend without clear ROI.
- Material new dilution is announced (large equity issuance or highly dilutive convertible terms) that overwhelms earnings progress.
- Regulation that limits monetization levers (e.g., stricter content licensing rules or ad restrictions) is implemented.
Conversely, I would add to the position if Bilibili reports a clean, multi-quarter trend of rising ad ARPU, growing paying users, or posts another clearly profitable games release and the company reduces outstanding convertibles further.
Final take
Bilibili presents an asymmetric trade into 2026: the information set from 2025 - sequential quarterly results and capital actions around convertibles - points to improving fundamentals and lower headline risk. At ~ $24.95 ADS, the stock is attractive as a position trade with a disciplined stop at $21 and layered profit targets at $32 and $40. This is not a low-risk, buy-and-forget name; it's a tactical long where execution and macro conditions must cooperate. Use small initial sizing, manage risk actively, and treat upside as contingent on continued ad strength and repeatable gaming profits.
Notable recent items:
- Q1 2025 results - released 05/20/2025
- Convertible senior notes and Class Z share offering completed - announced 05/23/2025
- Repurchase right completion - announced 06/13/2025
- Q2 2025 results - released 08/21/2025; press coverage on games/ads profitability - 08/22/2025
- Q3 2025 results - released 11/13/2025
Disclosure: This is a trade idea for informational purposes; not investment advice. Position size and suitability depend on your portfolio and risk tolerance.