Shares Of Chinese Internet Company Bilibili Soar On Tencent Stake

Shares of Bilibili Inc – ADR BILI, which operates a namesake online video sharing website, were advancing to three-month highs Wednesday morning. 

The stock was trading 8.34 percent higher to $14.42 at the time of publication. 

What Happened

Bilibili announced that TENCENT HOLDING/ADR TCEHY has agreed to make a cash investment of $317.6 million in the company. According to the agreement, Tencent will subscribe to 25,063,451 newly issued Class Z ordinary shares of Bilibili at price of $12.67 per share. Each ADS of Bilibili represents one Class Z ordinary share.

Why It's Important

The Tencent investment should come in handy, as Bilibili is in the early stages of transformation, with the growth in its investments outpacing revenue, Morgan Stanley analyst Alex Poon said in a late September note.

Bilibili's slowing ad business growth is hindering revenues, the analyst said.

What's Next

Tencent will own a roughly 12.3-percent stake in Bilibili when the transaction closes. 

In mid-September, Bilibili agreed to buy a minority stake in Japan's Fun-Media, which owns animation studios.

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Photo by Lan Yiyi/Wikimedia.