BILIBILI Inc., which is backed by Alibaba Group, closed 1 percent below its listing price in its Hong Kong trading debut yesterday, becoming the latest U.S.-traded mainland firm to disappoint on its homecoming share trading debut.

It was the worst start in Hong Kong in six months by a major stock listing. Bilibili, which raised HK$20.2 billion (US$2.6 billion) after pricing shares at HK$808 each last week, debuted 2.2 percent lower and dropped 6.7 percent before it recovered to close at HK$800 a piece.

Bilibili’s disappointing debut also follows Baidu Inc., which last week closed unchanged on its first day of trading in Hong Kong and has since dropped roughly 15 percent.

In his first interview with international media, Bilibili chief executive Chen Rui yesterday said he’s unconcerned with short-term market gyrations. The firm, which has 200 million mostly Chinese millennial or Gen Z monthly users, as well as the backing of both Tencent Holdings Ltd. and Alibaba Group Holding Ltd., will use most of the proceeds from the share sale to beef up its content and support its creators, in anticipation of an explosive growth in online video adoption over the next few years.

All Internet users in China — numbering nearly 1 billion as of December — will eventually adopt the format, Chen predicts. The company intends to prioritize improving its content and growing its user base over the next few years over profitability, in order to capitalize on the video mega-trend.

“We wouldn’t care too much about short-term performance in the stock market,” the 43-year-old billionaire entrepreneur said, adding the firm had long been planning to list in Hong Kong. “Nobody will remember whether your stock went up or down on the debut in 10 years’ time.”

Back in 2009, Bilibili was born as a forum for gaming and anime fans like its creator Xu Yi, a then 20-year-old college student. But it was Chen who transformed the site from an after-school project into a promising business when the serial entrepreneur took the helm in 2014.

Bilibili has since cleaned up pirated content on its platform while plowing half a billion dollars into broadcast rights since 2018. It expanded into adjacent businesses including livestreaming, e-commerce and game publishing, its biggest cash cow.

Along the way, Chen, who previously co-founded app maker Cheetah Mobile Inc., secured investments from both Tencent and Alibaba, a rare feat in China’s Internet arena where up-and-comers usually align themselves with one of the twin giants.

Bilibili has partnered with Tencent and Alibaba on content production and e-commerce, respectively, and could “further deepen ties” with both parties, said Chen, who holds roughly 13 percent of the equity but about 44 percent of the vote. Sony Corp. has a stake in the firm as well.

Videos “will be a major trend for the Internet industry over the next three to five years,” said Chen. “The market will be in ultra-high-speed growth for the next several years. Popular video platforms, like us, will all have great opportunities.”

The firm forecast revenue to grow at least 73 percent to 3.7 billion yuan (US$565 million) this quarter and aims to double its monthly active users by 2023.

“With support from Tencent and Alibaba, Bilibili looks well-positioned to capture the long-term trend in the Gen Z entertainment market across content, community and commercialization,” said Jefferies analysts led by Thomas Chon. It’s “one of the key beneficiaries to capture the secular trend in video consumption.”

Investors embrace Bilibili as a way to tap into the growing buying power of China’s Gen Z population, which has also supercharged startups like toy maker Pop Mart International Group Ltd. and social commerce app Xiaohongshu. Over 86 percent of Bilibili’s monthly users are aged 35 and below, iResearch estimated.

Alongside posts on League of Legends or Japanese manga series Naruto, Bilibili users now consume and create content on everything from life hacks to rap mixes and make-up tutorials. Even Apple Inc. CEO Tim Cook last month sat down for an interview with a tech influencer on the platform. (SD-Agencies)