The popularity of cryptocurrency is tempting more and more Internet companies to penetrate into it.
Especially since 2021, the cryptocurrency market represented by Bitcoin has been smashing. On April 14, the price of Bitcoin hit a record high again, breaking through $64,000, and its total market value exceeded $1 trillion, second only to Apple, Microsoft, Saudi Aramco, Amazon and Google.
This makes Meitu, which once used the label of “blockchain concept stocks” to refresh its highest stock price in one fell swoop, strengthened its idea of investing in cryptocurrencies.
Following March 7 and March 17, Meitu again purchased cryptocurrencies from the open market on April 8. So far, Meitu’s total investment in cryptocurrency has reached 100 million U.S. dollars, completing the purchase limit of the investment plan in the previous announcement.
If you add up the three times, Meitu currently holds more than 940 bitcoins, with an average purchase price of approximately US$52,610, and also holds 31,000 ethers, with an average purchase price of approximately US$1629.
According to a rough estimate by the “Whip Bull”, regardless of the handling fee, and Meitu did not lighten up its position throughout the entire process, as of April 20, the floating profit of its purchases of Bitcoin and Ether was close to 19.051 million U.S. dollars.
Regarding the crazy increase in cryptocurrency, Meitu explained in the announcement that cryptocurrency has enough room for appreciation. By allocating part of its cash reserves to cryptocurrency, it can also diversify the risk of holding cash. And this can show investors and stakeholders the company’s ambition and determination to accept technological innovation, so as to prepare for entering the blockchain industry.
Can Meitu save itself by relying on cryptocurrency?
“When you read Meitu’s financial report, you probably know the purpose of its investment in cryptocurrency, and the cryptocurrency represented by Bitcoin is still in the skyrocketing stage, but it should be noted that Bitcoin has never only risen but never fell. , The roller coaster industry has appeared many times.” Wu Songtao, an insider in the blockchain industry, analyzed to the “Whip Bull”.
Such concerns are not unreasonable. On April 18, Bitcoin plummeted by more than 16%, Ethereum plummeted by nearly 20%, and Ripple plummeted by 26%. The cryptocurrency plummeted across the board, causing huge losses to investors. Data from UAlCoin showed that cryptocurrency contracts broke out in a total of over 49.3 billion yuan in one day, and more than 70,000 heads were bloodbathed. The cryptocurrency crash is so fierce that it has even made it into the hot search list of Weibo.
In fact, Meitu already has a deep understanding of the “moody” of cryptocurrency.
“Cai Wensheng, chairman of Meitu, first started by doing domain names, and later started venture capital, so he is very good at investment.” Wu Songtao believes, “and he invested in Ouyi OKEx in 2014, and in 2018 He used to be the rotating group owner of the well-known “Three O’clock Sleepless Blockchain” group, and later published a blockchain white paper, and the cooperative BEC tokens also landed on the cryptocurrency trading platform, but only two months later Suddenly return to zero.”
Regarding Meitu’s multiple investments in cryptocurrencies such as Bitcoin and Ethereum, another blockchain industry person who did not want to be named believes that Meitu uses cryptocurrency as a high-risk asset for speculation. If it generates losses, it will Meitu cannot afford it, and it may further affect its main business.
Meitu’s ambition to hold cryptocurrency this time is really not small. According to the 2020 financial report data, Meitu’s total revenue is 1.194 billion yuan, and as of April 8, Meitu has invested a total of about 100 million U.S. dollars (about 655 million yuan) in cryptocurrency, which is equivalent to One-half of total revenue in 2020.
However, Cai Wensheng has a different view on this: “Purchasing cryptocurrencies is a value reserve for the long-term development of the blockchain strategy. Cryptocurrencies have enough room for appreciation. At this time, part of the cash reserves can be allocated to cryptocurrencies. Spread the risk of holding cash in fund management. I believe this investment can maximize long-term shareholder value.”
However, regardless of the views of all parties on Meitu plus cryptocurrency, the decline of Meitu is an indisputable fact.
Due to the fact that Meitu’s retouching artifact Meitu Xiuxiu, the short video platform Meipai, and the beauty camera are restricted by the weakness of tool-based products’ liquidity capabilities, Meitu has to try to explore new areas. However, there is no exception. , Meitu’s earnings in various popular areas such as smartphones, e-commerce, gaming, and finance were far below expectations, which further caused its performance and stock prices to continue to decline.
In particular, it is worth mentioning that the mobile phone business was once Meitu’s main source of income. In 2013, Meitu launched its own-brand mobile phones. In the following 5 years, the mobile phone business revenue accounted for 59.7%, 87.8%, 89.9%, 93.4% and 83% of total revenue, respectively. Beginning in 2018, Meitu’s mobile phone business began to trend sluggish, with sales halved. In April 2019, Meitu authorized the R&D, production, sales and promotion of Meitu mobile phones to Xiaomi, and hastily ended the war in the field of smartphones.
Meitu, which has lost revenue support, is not developing smoothly in the field of e-commerce. Meitu Beauty has tried to attract users with a small function such as smart skin measurement, and has also done a lot of promotional activities, but this has not only failed to cultivate the user’s habits, but directly increased the marketing cost of Meitu. Under comprehensive trade-offs, Meitu had to stop its e-commerce business on November 30, 2018, and the platform shops, shops, and transaction functions were all closed.
Public data shows that from 2013 to 2019, Meitu had a cumulative loss of approximately 12.1 billion yuan. An obvious situation is that Meitu urgently needs a way to make money quickly under the background that it is difficult to make breakthrough progress in its main business.
With its investment in cryptocurrency, Meitu also ushered in its second spring. Meitu’s 2020 financial report data shows that its adjusted net profit attributable to the parent is 60.9 million yuan. This means that Meitu has increased its cryptocurrency three times, and its floating profit has exceeded 200% of Meitu’s 2020 annual net profit after being converted into RMB.
In Wu Songtao’s view, whether Meitu can save itself with cryptocurrencies is still uncertain. “Although investing in cryptocurrencies has allowed Meitu to obtain huge returns in a short period of time, cryptocurrencies are highly volatile and have extremely high risk factors. Entering the blockchain industry is also extremely challenging, and Meitu’s prospects are still uncertain.”
Not only Meitu, Tesla is also betting heavily
Unlike Meitu, whose main business growth is weak, Tesla, which has continued to soar in stock prices and completed SpaceX’s new round of financing, is also betting heavily on cryptocurrencies.
On January 29, after Elon Musk changed his Twitter profile to “#bitcoin”, Bitcoin immediately soared to 38,000 U.S. dollars, an increase of 18% at one time.
Since then, Musk has repeatedly praised Bitcoin in public. On February 1, Musk shared on the audio social software that he had got a share of the Bitcoin transaction as early as 2013. He also thought that his entry time was a lot late, “it should be at least 8 years ago. Buy Bitcoin”.
Not long after such remarks were made public, on February 8, according to Tesla’s financial report submitted to the US Securities and Exchange Commission, Tesla had bought 1.5 billion U.S. dollars (about 10 billion yuan) worth of Bitcoin. The report also pointed out that, on the basis of legal permission, the form of payment products in Bitcoin will be accepted within certain limits in the future.
As soon as this news came out, the price of Bitcoin soared, even breaking through the $47,000 mark.
In fact, not only Bitcoin, Musk also highly respects other cryptocurrencies. On February 20th, Musk said on Twitter, “I just built some Dogecoin miners with my children.” After that, Dogecoin increased by more than 7% in 24 hours. In the past month, Musk has posted nearly 10 tweets about Dogecoin. By April 16, the rising Dogecoin once again showed a violent growth trend, with a rise of 250% within 24 hours. , The total market value has exceeded 60 billion U.S. dollars, and Dogecoin has become one of the hottest cryptocurrencies.
In Wu Songtao’s view, Musk’s “fancy merchandising” has directly promoted the rising price of Bitcoin. “Musk has 48 million followers on social media, especially by young investors around the world. Once the news of Bitcoin payments spread, Tesla, which had just bought $1.5 billion in Bitcoin, easily obtained a very substantial book income without any operation.”
According to foreign media estimates, Tesla holds more than 42,000 bitcoins, ranking second in the number of bitcoin held by listed companies in the world. As of April 20, Tesla’s floating profit has exceeded US$990 million, which is 37% higher than its 2020 net profit of US$721 million.
At the same time, another milestone in cryptocurrency has arrived.
In the early morning of April 15, Beijing time, Coinbase, the largest cryptocurrency exchange in the United States, was listed on the Nasdaq. The listing of Coinbase is considered by industry insiders to be a landmark event and aroused widespread excitement. This means that a large number of “regular forces” are accelerating their entry into the cryptocurrency field, and it also means that the mainstream market has gradually begun to accept cryptocurrencies.
However, in the U.S. stock market, Tesla is not the listed company that makes the most money from investing in cryptocurrencies.
In early February, the official website of the American business software company Microstrategy showed that Microstrategy had once again purchased $10 million in Bitcoin. MicroStrategy CEO Michael Sayler stated that MicroStrategy purchased approximately 295 bitcoins for US$10 million in cash, with an average price of US$33,808 per bitcoin.
On March 12, MicroStrategy announced that it had purchased another 262 bitcoins at a price of 15 million U.S. dollars, with an average price of 57,146 U.S. dollars. According to data disclosed by MicroStrategy, it now owns about 91,326 bitcoins, which are purchased at a price of US$2.21 billion, with an average purchase price of about US$24,214. If calculated at the current price, the value of Bitcoin held by MicroStrategy exceeds US$5.1 billion, and the floating profit is close to US$3 billion.
Cryptocurrency will usher in “severe” regulation
“As Coinbase becomes a listed company and the price of Bitcoin continues to soar, the attention of regulators will continue to increase.” Wu Songtao analyzed.
Regulatory issues have always been the sword of Damoskeli that hangs above the cryptocurrency market. Jesse Powell, CEO of Kraken, one of the world’s four largest cryptocurrency exchanges, warned that governments around the world may restrict the use of Bitcoin and other cryptocurrencies. He said: “I think there may be some crackdowns around cryptocurrency. The currency’s regulatory uncertainty will not disappear soon. The United States is more “short-sighted” than other countries and is sensitive to pressure from traditional companies such as banks.”
After the new US government came to power, the US Treasury Department and the Federal Reserve were both at the forefront of attacking Bitcoin.
On February 22 this year, U.S. Treasury Secretary Janet Yellen used the two stances of “Bitcoin is often used for illegal financing” and “It is a highly speculative asset” to smash Bitcoin from US$58,000 to US$46,000. .
On February 26, Yellen publicly criticized Bitcoin again. “Bitcoin’s legality and stability still have important issues.” Yellen said, “I don’t think Bitcoin can be widely used as a transaction mechanism. To some extent, I worry that it will usually be used for illegal financing. Using it for transactions is an extremely inefficient way, and processing transactions requires an astonishing amount of power.”
Recently, the U.S. government has proposed an anti-money laundering rule that requires individuals who hold cryptocurrencies in digital wallets to conduct transactions of $3,000 and above. They must conduct identity checks. In addition, the Indian government is also considering legislation to ban cryptocurrencies and penalize transactions and even holding cryptocurrencies. The new law will give cryptocurrency holders 6 months to liquidate such assets.
Not only foreign countries, but also domestic regulations on cryptocurrency are becoming stricter.
On the evening of April 18, at the Digital Payment and Digital Currency Sub-forum of the Boao Forum for Asia 2021 Annual Conference, Li Bo, deputy governor of the Central Bank, gave a speech on cryptocurrency and other issues, “Bitcoin and stablecoins are encrypted assets. Encryption. Assets are an investment option. It is not currency itself, but an alternative investment product. The main role that crypto assets may play in the future is as an investment tool or alternative investment.”
Li Bo said that many countries, including China, are also studying how such an investment tool should match the regulatory environment. Until we understand what kind of regulatory rules are needed, we will continue to maintain current initiatives and practices.
In the eyes of the above-mentioned blockchain industry insiders, cryptocurrency is a new thing with unique and advanced technological advantages, but only using this technology for investment will face great risks, and it will be overkill. As listed companies such as Meitu and Tesla madly increase cryptocurrency, it will accelerate the popularity of cryptocurrency to a certain extent, and once cryptocurrency becomes popular, it will push the government to implement stricter supervision.
“In fact, the world has not had a unified solution for how to regulate cryptocurrency.” The industry insider said, “But it is foreseeable that as the cryptocurrency investor base expands, both domestic and foreign It will prompt regulatory agencies to accelerate their involvement.”
It’s not surprising that the plot of a listed company to make a profit and even make a profit through speculation is not surprising, because a similar plot of dog-blood was staged a few years ago. The only difference is that at that time, the listed company was speculating on houses instead of coins. .
An undeniable fact is that it is an extremely dangerous signal for a listed company to give up its main business and obtain huge profits through real estate speculation, and this phenomenon is even worse in 2019.
Public data shows that as of the end of the third quarter of 2019, of the 3,743 A-share listed companies, 1,826 listed companies held investment real estate, accounting for more than 48%, and the total market value reached 1.3 trillion yuan. In other words, nearly half of the listed companies did not properly operate their main business, but went to real estate speculation.
Selling two sets of school district housing “protection”, the main business is automobile manufacturing, but sold out 401 suites in one fell swoop… Real estate speculation became the only secret for the listed companies to turn losses into profits for the whole year.
Whether it’s real estate speculation or currency speculation, the essence is the same. Listed companies allow their main business to be weak and turn to make quick money. This is actually a way of turning the cart before the horse. Drink poison to quench thirst, and moisturize seedlings to encourage growth.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.