Bilibili: More Profitable Than Ever, Cut Nearly in Half — Wait for the Growth Proof

Bilibili, the Chinese streaming-and-gaming platform, spent 2025 as one of the market's comeback stories — the stock roughly doubled last year as investors finally got the profits they'd waited years to see. Then it gave back most of it. The shares that traded near $36 a year ago now sit around $15, down roughly 40% in four months and close to a 52-week low.

The strange part is that the business hasn't soured. In its June 2026 quarter, revenue rose 8% year over year to RMB 7.9 billion, net profit jumped 55% to RMB 339 million, and gross margin reached 37.2% — the 16th consecutive quarter of margin expansion. So the collapse in the share price is not a profit collapse. It is a rotation in where the growth comes from, and that rotation is the whole story behind whether $15 is a gift or a value trap.

The engine that powered the comeback has cooled

The turnaround investors celebrated was built on mobile gaming. A blockbuster title carried revenue growth to roughly 26% at the late-2024 inflection and pushed adjusted net income positive for the first time — the moment the "Bilibili is finally profitable" narrative began. That hit game is now the problem. Mobile-game revenue fell 14% in the June quarter, the fourth straight quarter of double-digit decline, as the prior year's blockbuster created a brutal base for comparison. The drag pulled total growth down to 8% from 20% a year earlier.

Management attributes the slide to that tough base and expects game growth to resume in the fourth quarter with new title launches. That is a reasonable hope, but it is a hope — no bookings or revenue yet, and the company declined to give quantitative guidance for the third quarter.

Advertising is now the story, and the numbers back it so far

The offset is advertising, and it's real. Ad revenue climbed 28% to RMB 3.1 billion, making it Bilibili's largest segment at roughly 40% of total revenue, helped by AI-driven ad matching. Engagement supports the ad engine: daily active users rose 7% to about 117 million, average daily time spent reached 113 minutes, and total time spent was up 14%. Adjusted net profit rose 25% to about RMB 704 million, an 8.9% adjusted margin. This profitability is earned through 16 quarters of climbing gross margin, not manufactured.

The caveat is durability. Advertising is the most macro-sensitive line in the company, China's ad market has been soft, and Bilibili is effectively asking investors to believe one segment can carry a single-digit grower until games return. Its lower-margin value-added services grew just 5%. That is a narrow bridge between the revenue the company has today and the growth story it needs.

The reset is real — the price fell far more than the economics

This is where the valuation turns the argument. The share price has fallen more than half from its high while margins, profit, and cash generation all improved. Bilibili produced roughly $760 million of free cash flow over the trailing year against a market cap of about $6.4 billion — a free-cash-flow yield near 12%, and higher than that on enterprise value, because the company reported about RMB 24 billion (roughly $3.6 billion) in cash and short-term investments and carries a net-cash-positive balance sheet. The stock trades at under one times sales and around 11 times enterprise value to EBITDA. In June it also authorized a two-year $300 million share repurchase.

That is the classic reset setup: a multiple compressing faster than the operating reality. The bear case is that this is not a temporary dip but a structural slowdown. Gaming is a hits business; without a new title, Bilibili becomes a roughly 8% grower with a 9% net margin priced like the mature, modest-growth media company it is not yet. That risk is present and cannot be waved away.

Cheaper and profitable — but not yet proven

Company quality and stock quality have moved in opposite directions over the past year — the business got cheaper and more profitable at the same time. That makes Bilibili a legitimate candidate for the "too cheap to ignore" pile rather than a fresh casualty. But the doubts all rest on one unfalsified question: whether fourth-quarter game launches reverse a four-quarter slide and whether ~28% ad growth holds when the underlying ad market is soft. If those reports deliver, $15 will look like the wrong side of a reset. If they don't, the multiple has room to keep grinding lower. Until the next two quarters supply that proof, the honest call is to wait — a real turnaround you can now watch with serious interest, not a confirmed buy.