Bilibili’s Market Conundrum: Strong Fundamentals Clash With Weak Share Performance

Chinese video platform Bilibili Inc. presents a compelling financial puzzle for investors. Despite reporting a dramatic swing to profitability and achieving record user engagement metrics, the company's stock has faced significant downward pressure. This divergence between operational success and market performance raises a critical question: how can a business become substantially more profitable while simultaneously losing value on the exchange?

The platform's community metrics reveal extraordinary strength, suggesting a deeply engaged user base that typically signals strong future revenue potential. Bilibili's daily active users expanded by 9% to reach 117 million, while monthly active users grew 8% to 376 million. Perhaps most significantly, paying subscribers surged 17% to 35 million, indicating successful monetization efforts. Users now spend a record average of 112 minutes daily on the platform, underscoring the compelling nature of Bilibili's content ecosystem.

Remarkable Financial Turnaround

Bilibili's third-quarter 2025 financial results demonstrate a spectacular operational transformation. The company reversed a net loss of 798 million yuan from the same period last year to post a net profit of 469 million yuan. Even more impressive, adjusted earnings skyrocketed 233% to reach 786 million yuan. Operational efficiency showed sustained improvement, with gross margins expanding for the 13th consecutive quarter to stand at 36.7%. Total revenue advanced 5% to 7.69 billion yuan, powered by a 23% jump in advertising income and a 7% increase in value-added services.

Should investors sell immediately? Or is it worth buying Bilibili?

Gaming Segment Emerges as Primary Concern

Contrasting with these positive developments, Bilibili's mobile gaming division registered a concerning 17% decline. New game releases, including "Escape from Duckov," failed to offset weakening performance from older titles. This segment's underperformance appears to be a key factor driving negative market sentiment despite strong results elsewhere in the business.

Analytical Community Maintains Cautious Stance

Financial institutions have responded with measured optimism tempered by practical concerns. Morgan Stanley raised its price target to $25 while maintaining an "Equalweight" rating. Citi increased its target to $27 but sustained its "Neutral" assessment. CLSA expressed more bullish sentiment with a $29.1 target and "Outperform" recommendation. Across these evaluations, a common theme emerges: despite robust fundamental metrics, Bilibili's valuation already appears demanding, and the gaming segment poses potential headwinds for the fourth quarter.

The central investment question remains whether Bilibili can resolve the apparent contradiction between its strengthening financial foundations and weakening stock valuation. The answer will determine if current price levels represent an attractive entry point or validate the market's prevailing skepticism.