We are initiating coverage on Bilibili Inc. (BILI). Bilibili is the largest Gen Z Community in China with DAUs and MAUs reaching 102 and 336 Million in 2Q24. Gross margin improved sequentially, and the company is expected to achieve a quarterly non-GAAP profit in 3Q24. Gaming and advertising are the key drivers for its profitability. For a given amount of web traffic, advertising monetization will ramp up on ad load upside and adtech upgrade. However, we also see some concerns in the market regarding the company’s gaming pipeline and long-term profit margin, which are expected to be addressed in its coming earnings.
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