Upcoming Earnings Calendar (Feb 28th - Mar 4th)
Hey guys! Here's the upcoming earnings calendar! Two of my holdings, $SE and $SOFI report next week, so I'll be paying significant attention to both. Other than that, I'm also interested in seeing what retailers like $TGT $BBY and $COST have to say about supply chain issues and inflation.

Good luck to everyone!

If you'd like an easier way to track earnings dates, you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.

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Upcoming Earnings Calendar! (Nov 15th-19th)
Earnings season is slowly coming to a close, but there are still several highly interesting events coming up. Here's next week's earnings calendar and what I'll for looking forward to.

  • $SE: insights on their global e-commerce expansion.
  • $NVDA: comments on their product availability and supply.
  • $WMT: Update on their Walmart+ membership and comments on inflation/labor shortage/supply chain issues.
  • $DLO although this stock is too richly valued for me, I like their business and I'm following it in case there's a good buying opportunity post-earnings.

Comment below which earnings report you are looking forward to the most!

Friendly reminder: you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.

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SEC Filings and what you really need to know
SEC FILINGS

Form 8-k

This form is used to report newsworthy events to the SEC, thereby making them available to the public. Included are items such as change in management, change In the company’s name, mergers or acquisitions, bankruptcy filings, and major new product introductions or sale of a product line. A Form 8-K HAS to be filed when a member of the board of directors resign over a disagreement. The 8-K is filed within four business days of the occurrence. This form is used only by domestic issuers, foreign issuers are exempt. Although ADR’s are registered with the SEC, they too are exempt because of the underlying security of foreign issue.

Form 10-K
Most domestic public issuers must file an annual report to the SEC on FORM 10-K. This report is a comprehensive overview of the company’s business and financial condition and includes financial statements that have been audited by an independent accountant. Do not confute this with the annual report to shareholders, which also contains and audited financial information than the annual report, while the annual report will have much more detail about the company itself and its future plans.
The Filing Deadlines depend upon the company’s public float. For Companies with a float of $700million or more, the Form 10-K deadline is 60-days after the close of the fiscal year; $75 million, but not $700 million, it is 75 days; and less than $75 million is due at 90 days.

Form 10-Q
Because one year between filings is a long time and a lot can happen quickly, we also have this form, and it is filed quarterly (Q for quarterly). It contains unaudited financial statements and for all but the companies with a public float of less than $75 million, it must be filed within 40 days of each of the first three fiscal quarters of the year (no 10-Q is filed at the end of the fourth quarter—that information is taken care of by the filing of the 10-K). Those smaller firms file theirs within 45 days of the end of the quarter.

Annual Reports
When it comes to publicly traded companies, in general, all shareholders must receive a copy of the issuer’s annual report. For those too lazy to access EDGAR, this is the most detailed information they can get on the company’s financial position. Unlike the Form 10-K, this is usually a professionally prepared piece with just as much used for marketing purposes as it is for providing information. There is usually a welcoming letter from the CEO/Chairman of the board, and it is generally loaded with beautiful pictures of smiling people (employees and customers) and the company’s facilities. New plans for products and programs are discussed and voting proxies are included.

Form S-1
SEC Form S-1 is the initial registration form for new securities required by the SEC for public companies that are based in the U.S. Any security that meets the criteria must have an S-1 filing before shares can be listed on a national exchange, such as the New York Stock Exchange. Companies usually file SEC Form S-1 in anticipation of their initial public offering (IPO). Form S-1 requires companies to provide information on the planned use of capital proceeds, detail the current business model and competition and provide a brief prospectus of the planned security itself, offering price methodology and any dilution that will occur to other listed securities.
SEC Form S-1 is also known as the registration statement under the Securities Act of 1933. Additionally, the SEC requires the disclosure of any material business dealings between the company and its directors and outside counsel. Investors can view S-1 filings online to perform due diligence on new offerings prior to their issue.
Foreign issuers of securities in the U.S. don’t use SEC Form S-1 but instead must submit an SEC Form F-1.

Form S-3
SEC Form S-3 is a regulatory filing that provides simplified reporting for issuers of registered securities.
An S-3 filing is utilized when a company wishes to raise capital, usually as a secondary offering after an initial public offering has already occurred.
In order to utilize the simplified process, firms must first meet a certain set of eligibility criteria.The SEC form S-3 is sometimes filed after an initial public offering (IPO) and is generally filed concurrently with common stock or preferred stock offerings.
There are a variety of other requirements that must be met for a business to file the S-3 form. In the 12 months prior to filling out the form, a company must have met all debt and dividend requirements. The SEC Act of 1933 also requires that these forms be filed to ensure that essential facts about the business are disclosed upon the company’s registration of securities. Doing so allows the SEC to provide investors with specifics about the securities being offered and works to eliminate fraudulent sales of such securities.

Form 4
SEC Form 4: Statement of Changes in Beneficial Ownership is a document that must be filed with the Securities and Exchange Commission (SEC) whenever there is a material change in the holdings of company insiders. Insiders consist of directors and officers of the company, as well as any shareholders, owning 10% or more of the company's outstanding stock. The forms ask about the reporting person's relationship to the company and about purchases and sales of such equity shares.Form 4 must be filed with the Securities and Exchange Commission whenever there is a material change in the holdings of company insiders .If a party fails to disclose required information on a Form 4, civil or criminal actions could result. It must be filed within two business days starting from the end of the day the material transaction occurred.

Schedule 13D
The Schedule 13D is also known as the "beneficial ownership report" and is required when any owner acquires 5% or more of the voting shares in a company. The report must be filed within 10 days of reaching the 5% threshold. It provides the following information: The acquirer's name, address and other background information, Type of relationship this owner has with the company, Whether the person has been convicted of a crime in the past five years. An explanation of why the transaction is taking place, The type and class of the security, and The origin of funds used for purchases.

Form 144
Form 144 is required when corporate insiders want to dispose of company stock. The Form 144 is a notice of the intent to sell restricted stock, typically acquired by insiders or affiliates in a transaction not involving a public offering. The stock is restricted because it must meet certain conditions before becoming transferable. The transaction, or at least part of it, is made within 90 days of filing. Form 144 is required when the amount sold during any three-month period exceeds 5,000 shares or $50,000.

Initial Public Offering (IPO)
A corporation’s first sale of common stock to the public.

Secondary Offering
A Sale of Securities in which one or more major stockholders in a company sell all or a large portion of their holdings; the underwriting proceeds ae paid to the stockholders rather than to the corporation. Typically, such an offering occurs when the founder of a business (and perhaps some of the original financial backers) determine that there is more to be gained by going public than by staying private. The offering does not increase the number of shares of stock outstanding.

Regulation D (Private placements continued.)
The provision of the Securities Act of 1933 that exempts from registration offerings sold in private placements. Rule 506(b) limits the Sale to a maximum of 35 NON-accredited investors during a 12-month period with no advertising permitted, while Rule 506(c) permits advertising but requires that all purchasers be accredited investors.

Accredited Investor - As defined by Rule 501 of Regulation D, any institution or individual meeting minimum net worth requirements for the purchase of securities qualifying under the regulation d registration exemption. An individual accredited investor is generally accepted to be one who, individually or with spouse, has a net wort, excluding the net equity in the primary residence, of $1 million or more, or has had an annual income of $200,000 or more in each of the two most recent years (or $300,000 jointly with a spouse), and who has a reasonable expectation of reaching the same income level in the current year.

SEC Rule Change Effective 12/08/2020 -- Individuals who hold the Series 7, Series 65, or Series 82 Licenses, are now considered accredited investors by qualification.

There are more but these are some of the essentials to know for any active trader.

Kevin's avatar
$2.6m follower assets
Bilibili ($BILI) Part 2: Monetization
Hey folks! Playing around with Commonstock's memo maker, and decided I'd port over my Bilibili piece. I've noticed that the original piece in all it's glory is a tad long for most people to read in one sitting, so I'm going to be breaking it up into a "series" of memos on here.

I'll be posting these over the next few days, but if you want to read the whole thing right now, please visit my website here. And if you like our work, please consider subscribing. This is part of a sample research report we did. We will be publishing one more before putting it behind the paywall. Members Plus subscribers will also have access to a downloadable copy of our detailed financial model.

*Please see our disclaimers at the bottom of this memo and our full disclaimer here. By reading this memo, you acknowledge you have read our disclaimers and agree to our terms of use.

Monetization:
Bilibili monetizes primarily through four means:

1) Advertising.
This includes display ads, feed ads, and a prominent ad at the app’s opening screen. Notably, Bilibili has eschewed pre- and mid-roll ads, an ad format popular on YouTube, to better ensure a positive user experience amid many other video alternatives, while also keeping that “community” Bilibili originally envisioned by not over-commercializing. Rui Chen mentioned they plan to keep ad load flat at 5% (ambiguous metric), but there is still room for inventory expansion before it becomes a cumbersome experience. In our advertising analysis below, we estimate that there is an ad impression roughly every ~2 minutes, which has been corroborated by our channel checks, although it does vary by user.

*Here are a few of the types of ads run on the Bili platform. There are full video/photo ads that are displayed right when the app loads, an expanding half-screen ad that also allows you to browse the advertisers’ website, and e-commerce conversion cards that allow viewers to go directly to a store.

While impressions could go up overtime, the big unlock for their advertising initiatives is building better ad products for advertisers. Namely, an amped up direct response product with an easy-to-use self-serve platform and high quality attribution metrics. Coupling this with more advertisers is a powerful way to raise ad pricing (CPMs) on the platform as ad buyers spend to achieve specific ROAS targets that tend to be multitudes ahead of traditional channels. This was the playbook for the U.S. Social Media companies. Our estimated ARPU from advertising is lower versus peers like Kuaishou (~70rmb) vs Bili’s run-rate of ~50rmb. On a CPM basis though, we can see a more meaningful discrepancy with WeChat ranging from 50-150rmb, Douyin from 70-200rmb, and QQ at ~25rmb versus Bili’s ~4rmb. Below you can see that Ad revenue growth has recently been accelerating, with revenues +149% in the last quarter, almost twice as fast as they were growing just a year ago. However, the advertising story isn’t just about ad CPM parity with peers, but also the Chinese ad industry maturing with more advertisers joining the relatively new digital ad pool and buying ads on attributable return metrics (which before digital ads could never be done). While the US isn’t a great yardstick, Facebook does monetize users in their most developed North American market at ~$165 (~1,075rmb) and is still growing. PPP (purchasing power parity) adjusted by 3.5x (estimates vary) we get an ARPU of ~300rmb, which can be thought of as the full opportunity in a more mature ad ecosystem down the line. We go into more details below in our segment build.

2) Gaming.
While Tencent is the 800lb gorilla in gaming, Bilibili has been able to find some success by focusing on niche titles that fit well with its original ACG user base. Fate Grand Order (pictured below) is a Japanese game that Bilibili licensed in China with knockout success. Two years ago, it generated over a billion RMB in revenues for Bili, representing over half of its revenues. While a blockbuster gaming-hit is always welcomed, it changed the narrative of Bili in the investment community, and few felt good about the sustainability of a business model predicated on a single mobile game whose underlying IP it didn’t own.

*Fate/Grand Order is Bili’s flagship gaming product — it made up the majority of Bili’s revenues for it’s first few years, and acted as a cash flow generator that allowed it to invest in other areas (think how Search made up 99% of Google’s until recently).

However, those focusing on existing revenue pools missed the bigger picture: Bilibili’s audience was basically unmonetized. As other revenue initiatives became more mature, the top line importance of Fate/Grand Order started to fade–it represents just ~11% of revenue this year. For those unfamiliar with the Bilibili story, it might seem odd to start the gaming segment by downplaying its contribution, but it’s important to dispel the notion that Bilibili is just a one-hit mobile gaming company, as well as have a sense of how sentiment and the story has changed overtime.

*This is the mobile game download screen — looks very similar an App Store.

As far as its current gaming strategy goes, Bilibili continues to license and partner with developers, although with middling success so far. It is also investing in developers and started an in-house studio to produce proprietary games, although not much has come from this yet. Notably, some game developers are looking to Bilibili for distribution in hopes of circumventing the Tencent ecosystem and their high take-rate (estimated ~80%). As long as Bilibili keeps its audience engaged on the core of its platform, it will have plenty of time and multiple chances to break into mobile gaming in a bigger way.

*Bilibili recently spun off Bilibili Gaming, which just raised a $28mn financing round. Bilibili Gaming was formed in 2017, operates e-sports teams for a number of games (ie League of Legends, Overwatch), manages players, and organizes and broadcasts tournaments. They still own their gaming distribution, first party studios and other licensed IP.

3) VAS (Value Added Services).
There are two main items housed in this segment: Premium Subscriptions and Live Broadcasting. Premium subscriptions are for exclusive content and include content Bilibili produces itself. Subscriptions range from 20-25rmb a month depending on subscription length. Today they have 14.5mn premium members, up over +60% YoY, which represents 43% of this segment’s revenues. Bilibili plans to continue to invest in their OGV (occupationally generated video, basically proprietary videos) content to further convert users to premium paying members.

Live Broadcasting revenues are generated from selling virtual items during live video streams. Essentially, a creator will live stream with users interacting with them through messages. It is common for users to send virtual gifts which show up on the screen and can produce special effects like fireworks, with the gift sender often receiving public acknowledgement from the creator. Bilibili has an estimated 30-45% take-rate (depending on creator size) with the creator getting the rest. While virtual gifts may seem like an odd novelty to Western readers, they are common across Asia and growing in usage. 34% of VAS revenue comes from virtual items, but their importance is much broader than the direct revenue impact. Virtual gifts are a vital revenue stream for many content creators as it allows them to directly monetize their userbase. This is important because the more money creators earn from Bilibili’s platform, the more time and energy they will put in to produce more content for it, which in turn brings in more users. Having creators make money is an essential underpinning of a vibrant and durable platform ecosystem. However, having to share a majority of revenue is also a negative and will weigh on incremental margins (expanded on below). Additionally, Bilibili has started to pay up for exclusive rights, like their 800mn RMB, 3 year contract to broadcast the League of Legends eSports World Championship. This helps increase brand visibility, decrease churn by offering something exclusive, and could have a symbiotic relationship to cross sell with their gaming and e-commerce offerings down the line.

The last pieces of VAS are Bilibili Comic, a standalone comic app, and Maoer (80% ownership), a premium platform that offers audio drama. While disclosures are limited, we know that together they are responsible for 23% of this segment’s revenues, which equates to a non-inconsequential 7% of Bilibili’s total revenue.

4) E-commerce and other.
Bilibili’s e-commerce initiatives are still very nascent, and currently focus on IP related to ACG content. Given ACG fans are fervent consumers of merchandise and they still have a large core audience here, it makes sense to start with this vertical. To speculate though, they could eventually allow creators to add shoppable posts alongside their videos or live streams, enabling frictionless purchase of whatever the creator wants to sell.

One of Bili’s e-commerce efforts showed in the form of a partnership with Taobao. The platforms aimed to connect creators and users in a virtual bazaar, with Bili creators becoming Taobao KOLs (Key Opinion Leader) and promoting merchandise through interactive content. The deal was created in the hopes of finding new ways to commercialize popular shows created by not only Bili’s creators, but also by Bili itself.

Left: Bili Mall Live Events
Right: Bili Mall Physical Goods

Beyond the Taobao partnership, Bili has been putting in much effort to build out their own e-commerce platform, expanding beyond physical goods to include real world events, such as anime conventions, movie showings, and festivals.

End of Part 2

Part 1 was an introduction to Bilibili and it's product.
Part 2 was a deep dive into Bilibili's monetization.
Part 3 will be an exploration of our core thesis on Bilibili.

Reminder that I'll be posting these over the next few days, but if you want to read the whole thing right now, please visit my website here. And if you like our work, please consider subscribing. This is part of a sample research report we did. We will be publishing one more before putting it behind the paywall. Members Plus subscribers will also have access to a downloadable copy of our detailed financial model.

And if you've gotten this far, thanks so much for reading! Would love any feedback anyone has - on content or on structure. Do you like this shorter version? Or would you prefer to read the entire thing at once? Are the photos stacked vertically okay, or do you prefer the slideshows?

*Disclaimer: I have a position in Bilibili and people who have helped craft this analysis may individually (or through funds they work at) have a position in the company. Absolutely nothing in this report is investment advice nor should it be construed as such. We make no claims to the veracity of all facts and figures presented in this report. Certain figures could be stated erroneously and certain analysis could be incorrect. Please see the full disclaimer linked above.

DJY Research, its author(s), any of its contributors, and any funds they may advise at may own securities in the companies, or related companies, written about on this website.
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Kevin's avatar
$2.6m follower assets
Bilibili ($BILI) Part 1: Introduction and Product Primer
Hey folks! Playing around with Commonstock's memo maker, and decided I'd port over my Bilibili piece. I've noticed that the original piece in all it's glory is a tad long for most people to read in one sitting, so I'm going to be breaking it up into a "series" of memos on here.

I'll be posting these over the next few days, but if you want to read the whole thing right now, please visit my website here. And if you like our work, please consider subscribing. This is part of a sample research report we did. We will be publishing one more before putting it behind the paywall. Members Plus subscribers will also have access to a downloadable copy of our detailed financial model.

*Please see our disclaimers at the bottom of this memo and our full disclaimer here. By reading this memo, you acknowledge you have read our disclaimers and agree to our terms of use.

TLDR:
Bilibili is an online video platform that hosts various user generated content, fostering a dedicated community initially built around ACG (anime, comics, and games). Since then, the platform has broadened its user base to cover a diverse set of interests and added live streaming, gaming, and e-commerce. Below we give a brief overview of Bilibili and dive into how we think about analyzing and valuing each of its businesses.

Product Primer/Introduction
Before we jump into the analysis, check out this slideshow to get a feel for what it’s like to browse Bili’s home page on a desktop. You can see advertisements, promoted videos, weekly schedules, and leaderboards (what’s trending).

Background:
Founded in 2009 by then college student, Yi Xu, out of frustration because ACG niche websites (namely ACFun and Nico Nico Douga) were low quality and unreliable. The Bilibili site was officially launched in 2010, but still suffered from the same low operational expertise and inadequate resources that plagued other ACG websites. Nevertheless, it garnered enough traction to popularize the novel Bullet Chat feature that allowed users’ comments to flow over the video. Rui Chen, then an accomplished entrepreneur with a fondness for anime, appreciated what Bilibili was trying to achieve, but nevertheless was prepared to set up a competitor that could better execute. However, Chen was reticent to go all in as he was managing another successful business that would invariably split his time. After meeting with Yi Xu, he instead opted to invest and lend his business expertise to Bilibili as an advisor until he took over as CEO in 2014 with Yi Xu focusing on platform development as President. Shortly after taking the reins, Chen secured the rights to license Fate/ Grand Order for a mobile game in China, which would grow to be their first (and only) material revenue stream for years. It was on the success of Fate that it could continue to reinvest and grow the platform, setting themselves up for the next stage of their expansion.

These are a few screenshots of the actual viewing experience. Rather than relegating the comments to the bottom of the page, Bilibili runs the comments over the video (these are called “bullet comments”). Users love the floating comments (they can be toggled off if not), because it’s a “constant reminder that they are not watching alone” and that they are part of a bigger community (think of how everyone cheers in a movie theater during a Marvel movie). The different colored/animated bullet comments are “premium comments” that you must pay for, typically in “Bcoin”, Bili’s on-platform currency which can also be used to purchase virtual gifts (for streamers) and toys.

**Service:**
While until last year mobile gaming comprised a majority of their revenues (~80% at the beginning of 2018), Bilibili’s mobile gaming success is mostly owed to a fortuitous licensing agreement with already popular IP (Fate/Grand Order) that fit well with its preexisting user base, and thus shouldn’t be over emphasized as we think about the fundamental value of its service. At its core, Bilibili is a video aggregation platform allowing creators to upload video content and users to easily find something of interest. It has matured meaningfully from the ACG community it was born to serve, as content has broadened to offer something appealing for virtually everyone. Nevertheless, the aura of the close-knit ACG community continues to permeate the platform, with more thoughtful and less offensive commentary than other open social communities. The quality of the community is in no small part thanks to the 100 question test users must pass to gain commentary privileges, which covers various interest-topics and acceptable etiquette, cultivating the desired user behavior best for the community. Sending a bullet chat essentially incorporates the user in the content, making it a more engaging experience and providing an opportunity to monetize as users can pay for special bullet chats like color. This friction to comment, not only selects for higher quality users and lowers the need for moderation, but also creates “buy-in”, which reduces churn without limiting their funnel of users. MAUs just reached 202mn, +55% YoY and “official members” who passed the exam reached 103mn, +51% YoY. Today, Bilibili also offers live streaming, subscriptions for premium content, and e-commerce in addition to its initial video hosting and mobile game distribution services.




This is the exam interface. Swipe right to see some of the types of questions one can expect on the exam. Of Bili’s 202 MAUs, 103mn are members who passed the exam. Of those 103mn members, 2mn are uploaders.

End of Part 1

Part 2 will be a deep dive into Bilibili's monetization.

Reminder that I'll be posting these over the next few days, but if you want to read the whole thing right now, please visit my website here. And if you like our work, please consider subscribing. This is part of a sample research report we did. We will be publishing one more before putting it behind the paywall. Members Plus subscribers will also have access to a downloadable copy of our detailed financial model.

And if you've gotten this far, thanks so much for reading! Would love any feedback anyone has - on content or on structure. Do you like this shorter version? Or would you prefer to read the entire thing at once? Are the photos stacked vertically okay, or do you prefer the slideshows?

*Disclaimer: I have a position in Bilibili and people who have helped craft this analysis may individually (or through funds they work at) have a position in the company. Absolutely nothing in this report is investment advice nor should it be construed as such. We make no claims to the veracity of all facts and figures presented in this report. Certain figures could be stated erroneously and certain analysis could be incorrect. Please see the full disclaimer linked above.

DJY Research, its author(s), any of its contributors, and any funds they may advise at may own securities in the companies, or related companies, written about on this website.
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Gannon Breslin's avatar
$172.7m follower assets
$NERD THREAD
I bought $NERD ETF today
$NERD invests in companies that earn revenue from esports, or esports related biz activities
Top holdings:
1) Corsair $CRSR
2) Tencent $TCEHY
3) Activision $ATVI
4) Bilibili $BILI
5) Razer $RZFF
Thread about why I am AMPED about buying into $NERD...

1/ LEAGUE WORLDS VS. SUPERBOWL
League of Legends (LoL), the biggest Esports games in the world, in 2019 had its biggest year with its total viewership of its World Championship with 100M views compared to Super Bowl LIII 98.2 M TV views
This is a BIG deal and is turning heads..

2/ ESPORTS
To name a few, MJ invested $26M in aXiomatic, owners of
TeamLiquid. Drake & Scooter Braun are co-owners of 100Thieves. Steph Curry is a part-owner of TSM.

3/ SO WHAT?
Long story short, Esports is exploding on a worldwide stage & has been for a while. $NERD is an ETF built by
@roundhill
( @maybebullish) that exposes an investor to companies that are growing in this space. Some key facts/holdings of this ETF...

Source: YCharts

4/ PERFORMANCE
$NERD & gaming stocks have been killing it during COVID. Esports aren't going anywhere after COVID & just like my bullishness on $AMD, many of these Esport stocks (even though not directly linked) will continue to move upward under the release of PS5/Xbox X...

5/ CONCLUSION
I am a gamer & have been for most of my life (COD/LoL). Athletes and other major investors see where this industry is going and the numbers (viewership) doesn't lie. $NERD is an ETF that exposes me to this space but helps with the guesswork. DO YOUR DD, LONG $NERD

6/ WHERE to FIND ME
If you follow me on here you would know that I bought $NERD and sold $WORK today. Also my finance newsletter is in my bio!
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Commonstock is a social network that amplifies the knowledge of the best investors, verified by actual track records for signal over noise. Community members can link their existing brokerage accounts and share their real time portfolio, performance and trades (by percent only, dollar amounts never shared). Commonstock is not a brokerage, but a social layer on top of existing brokerages helping to create more engaged and informed investors.