Investing

Earnings Previews: Bilibili, Pinduoduo

Paul Ausick

Published: November 25, 2022 10:45 am

The three major U.S. equity indexes closed higher on Wednesday. The Dow ended the day up 0.28%, the S&P 500 closed 0.59% higher, and the Nasdaq Composite closed up 0.99%. Ten of 11 sectors closed higher, with consumer cyclicals (up 1.33%) and communication services (up 1.22%) posting the biggest gains. Energy stocks (down 1.16%) were the day’s only losers.

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The Fed Open Market Committee (FOMC) minutes were published Wednesday afternoon, revealing that a “substantial majority of [members] judged that a slowing in the pace of increase would likely soon be appropriate.” That gave equities a positive jolt to end the day. Just a reminder that U.S. markets close at 1:00 p.m. ET today.

The three major indexes opened mixed flat Friday’s premarket morning.

There are no earnings reports due out Friday, and only two notable earnings reports are scheduled for early next week.

Bilibili

Bilibili Inc. (NASDAQ: BILI) offers gaming, video, and live broadcasting platforms for children and teens in the People’s Republic of China. Over the past year, Bilibili shares have dropped by more than 80%. Shares reached their 52-week low in late October, and the year-old 52-week high rolled off Thursday. Bilibili has failed to stop a serious decline in its gaming operations. In 2018, the company received about 80% of its revenue from gaming. That percentage has plunged to around 21%. The problem was severe enough that the company’s CEO has taken direct control of Bilibili’s gaming operations and shunted its former leader to the sidelines. Bilibili reports quarterly results before markets open Tuesday morning.

Of 36 brokerages covering the company, 26 have given the stock a Buy or Strong Buy rating, with another 9 putting a Hold rating on the shares. At a current price of around $13.40 per share, the upside potential based on a median price target of $25.14 is 87.6%. At the high target of $121.49, the implied upside is a whopping 807%.

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The consensus estimates call for third fiscal quarter revenue of $790.1 million, up 7.8% sequentially and down 2.1% year over year. Analysts have forecast an adjusted loss per share of $0.65, better than the prior quarter’s loss of $0.74 per share and flat year over year. For the full 2022 fiscal year ending in December, analysts are expecting Bilibili to post a per-share loss of $2.51 compared to a loss last year of $2.27 on sales of $3.1 billion, up 1.7%.

Bilibili is not expected to post a profit in 2022, 2023, or 2024. The enterprise value to sales multiple for 2022 is 1.4. For 2023 and 2024, the multiple is 1.1 and 0.9, respectively. The stock’s 52-week range is $8.23 to $69.88. Bilibili does not pay a dividend. Total shareholder return for the past year is negative 81.7%.

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Pinduoduo

Pinduoduo Inc. (NASDAQ: PDD) focuses on an e-commerce marketplace that matches China’s farmers and agricultural product wholesalers directly with the country’s consumers. Like other tech companies, Pinduoduo has taken a beating over the past 12 months, but since late August, the stock has cut its loss from 40% to about 16%. In mid-March, the stock was down nearly 98% from its 52-week high. Shortly after reporting earnings in August, the company launched a U.S. e-commerce site called Temu. The site quickly became the top shopping app in Apple’s U.S. App Store, and earlier this month, the app was the top free app overall. Temu’s free shopping app is also the top Android app. Pinduoduo is scheduled to report results before U.S. markets open Monday morning.

There are 38 analysts covering the stock, and 34 of those have given the shares a Buy or Strong Buy rating. The other 4 rate the stock a Hold. At a current price of around $66.70, the upside potential based on a median price target of $84.11 is about 26.1%. At the high price target of $112.52, the upside potential is 68.7%.

Analysts are expecting fiscal 2022 second-quarter revenue of $4.3 billion, down 8.3% sequentially and up 29.1% year over year. Adjusted EPS is forecast at $0.74, down 34.6% sequentially and up almost 118% year over year. For the full 2022 fiscal year, Pinduoduo is forecast to post EPS of $3.13, up 108%, on sales of $17.27 billion, up 16.8%.

Pinduoduo shares trade at a multiple of 21.3 times expected 2022 EPS, 18.8 times estimated 2023 earnings of $3.55, and 14.7 times estimated 2024 earnings of $4.55 per share. The stock’s 52-week range is $23.21 to $74.84. The company does not pay a dividend, and the total shareholder return for the past year was negative 18%.