Bilibili (BILI) came out with a quarterly loss of $0.19 per share compared to the Zacks consensus estimate of a loss of $0.22. This compares to a loss of $0.11 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents a profit surprise of 13.64%. A quarter ago, this Chinese video sharing website was expected to report a loss of $0.13 per share when it actually reported a loss of $0.20, which represents a surprise of -53.85%.
In the last four quarters, the company has exceeded the consensus EPS estimates only once.
Bilibili, which is part of the Zacks Internet services industry, reported revenues of $370.50 million for the quarter ending June 2020, exceeding the Zacks consensus estimate by 2.91%. This compares to the previous year’s revenue of $225.43 million. The company has exceeded the consensus revenue estimates three times over the last four quarters.
The sustainability of the immediate share price movement based on the recently published figures and future earnings expectations will mainly depend on management’s comments on the profit call.
Bilibili shares have gained about 152.4% since the beginning of the year, while the S&P 500 has gained 6.6%.
What will happen with Bilibili?
Although Bilibili has outperformed the market so far this year, investors are asking themselves the question: what will happen to the share?
There are no easy answers to this key question, but a reliable benchmark that can help investors answer this question is the company’s earnings outlook. This includes not only the current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed recently.
Empirical studies show a strong correlation between short-term stock movements and trends in the revision of earnings estimates. Investors can track such revisions themselves or rely on a proven rating tool such as Zacks Rank, which has harnessed the power of earnings estimate revisions in an impressive way.
In the run-up to this earnings release, the trend of the estimate revisions was unfavorable for Bilibili. While the scope and direction of the estimate revisions may change after the company’s just released earnings report, the current status leads to a Zacks Rank #4 (sell) for the stock. Therefore, the stock is expected to underperform the market in the near future.
It will be interesting to see how the estimates for the coming quarters and the current fiscal year will change in the coming days. The current consensus estimate of earnings per share is -$0.26 on revenues of $422.89 million for the coming quarter and -$0.91 on revenues of $1.56 billion for the current fiscal year.
Investors should be aware that the outlook for the industry can also have a significant impact on the performance of the share. As far as the Zacks industry ranking is concerned, Internet services are currently in the top 41% of the over 250 Zacks industries. Our research shows that the top 50% of the industries listed in the Zacks ranking exceed the bottom 50% by a factor of more than 2 to 1.