By Sam Boughedda
Bilibili Inc (NASDAQ:BILI) shares were downgraded to Neutral/High Risk, with the price target for the stock lowered to $12 from $38 by Citi analysts on Thursday.
They told investors in a note that the downgrade is based on loss-making and the current challenging macroeconomic environment.
"We have been positive on Bili given its unique ecosystem with further user growth potential and upside in monetization. However, with increasing uncertainty on the growth outlook amid worsening macro, we are cautious if slower growth momentum on tightening ad budgets, slower new games releases, and weakened spending on VAS could weigh on margins and push out profitability timing," wrote the analysts.
Specifically, Citi sees downside risk to consensus 2023E/24E revenue estimates. However, they decided not to reduce the rating to Sell because the firm still appreciates the company's unique ecosystem with its large user base that is under-monetized.
However, they added that "since Bili has yet to turn profitable, and with ~US$2.6bn CB puttable in next couple years amid a challenging capital funding environment, we see headwinds on potential worsening B/S quality."
Bilibili shares tumbled over 6% Thursday.