Bilibili Earnings: Revenue Acceleration and Cost Discipline Pave Way to Imminent Breakeven

Bilibili's fourth-quarter earnings were above both our and LSEG consensus estimates, thanks largely to aggressive cost-cutting measures. Management's outlook for 2024 points to even deeper cost reductions than we anticipated. Concerns in the market regarding engagement metrics seem unfounded; we attribute the quarter-on-quarter volatility primarily to seasonality. We are maintaining our $34 fair value estimate for the no-moat company. This valuation is based on our confidence that Bilibili will get to a 20% operating margin in the long term, primarily through operating leverage. Trading at just around $10 now, the share are very undervalued, in our view.