“There must always be someone who eats the crab first.” After Meitu bought cryptocurrency on a large scale, Cai Wensheng, the chairman of the board, said in the circle of friends.
However, the deliciousness of this crab carries risks. After briefly enjoying the floating profits brought by cryptocurrency, Meitu quickly fell into a loss.
On May 24, Meitu was listed on the hot search due to a loss of RMB 13 million due to speculation. The stock price of Meitu also fluctuated with the rise and fall of cryptocurrencies.
“The stock price is not related to the company’s main business, but to the virtual currency it invests in. Stockholders will have doubts about the company’s general direction, which is not a good thing for the company’s image.” Renmin University of China Financial Technology Cai Kailong, a senior researcher at the Institute, once told the media.
It is worth noting that Meitu has been in a state of loss for a long time and did not announce its first profit until 2020. The annual net profit is 60 million. This time, due to currency speculation, Meitu is equivalent to losing a quarter of profit earned. .
In recent years, Meitu has also been exploring various commercialization paths, but the development has not been smooth. Today, Meitu’s e-commerce business has been completely shut down, short video business is tepid, social trials are still being explored, and medical beauty business has just started.
So far, Meitu still has not found a benign commercialization path for itself. Perhaps because of revenue pressure, Meitu chose to use cryptocurrency to make money, but the skyrocketing and plummeting of cryptocurrencies, can Meitu be able to withstand it?
Obviously, speculation in coins cannot save Meitu. The company’s development can only continue to operate with a solid business system, and Meitu can only continue to stand on the poker table if it continues to find new business breakthroughs.
From a floating profit of hundreds of millions to a loss of hundreds of millions, Meitu’s currency speculation has fluctuated
Meitu has become a big “coin speculation” player.
Since the beginning of this year, Meitu has announced three high-profile purchases of cryptocurrencies.
On March 7, Meitu purchased cryptocurrencies for the first time, including 379 bitcoins at a purchase price of 47,214 US dollars; 15,000 ethers at a purchase price of 1,473 US dollars.
On March 17, Meitu purchased for the second time, including 386 bitcoins at a purchase price of 55,946 US dollars; 16,000 ethers at a purchase price of 1775 US dollars.
On April 8, Meitu spent another $56,922 and purchased 175 bitcoins.
So far, Meitu has held more than 940 bitcoins, with an average purchase price of approximately 52,610 US dollars; holding 31,000 ethers, with an average purchase price of approximately 1,629 US dollars, and the total investment has reached 100 million US dollars.
“This should be regarded as the first Hong Kong listed company to purchase BTC digital currency, and it is also the first listed company in the world to use ETH as a currency value reserve.” Cai Wensheng, chairman of Meitu, is quite proud of the company’s purchase of cryptocurrency.
After Meitu purchased the cryptocurrency, it did receive the soaring dividend of the currency circle for a short time. On April 13 this year, when the cryptocurrency market was at its best, the price of Bitcoin once broke the $63,000 mark, and Ethereum also exceeded $2,200.
Calculated based on this price, the highest floating profit of the cryptocurrency assets held by Meitu reached US$27.48 million (approximately 177 million yuan), while the adjusted net profit of Meitu for the whole year of 2020 was only 60.9 million yuan.
It’s no wonder Cai Wensheng continues to buy cryptocurrencies. After all, speculation is not only more profitable than the company’s business, but also faster.
However, the money for speculation comes faster and goes faster.
Since May 12, cryptocurrencies such as Bitcoin and Ethereum have plummeted one after another.
On May 19, the currency circle suffered a “bloodbath.” According to data from Bitcoin Homes, in the past 24 hours that day, 220,000 people in the cryptocurrency market broke out, with a total amount of 12.2 billion yuan.
According to online Insight, Bitcoin fell below the US$39,000 mark on that day, a 24-hour drop of more than 14%, and the lowest that day was only US$300 million per coin; Ethereum also did not get any better, and it also fell below the US$2900 mark, a drop of more than 17 %, the minimum is 1750 USD/piece on the day.
According to the calculation of the largest decline, the cryptocurrency held by Meitu Company on that day suffered a loss of US$19,691,000 (approximately 127 million yuan).
In the past month alone, Meitu has gone from a floating profit of hundreds of millions of yuan to a floating loss of hundreds of millions of yuan.
For this reason, Mito, which has already faded out of the user’s field of vision, was once on the hot search due to losses in investing in cryptocurrencies.
Even on the investment platform, there are individual investors who questioned: “What kind of decision makes Meitu invest in Bitcoin at a high level?”
However, so far Meitu has not responded to the issue of huge profits and losses in cryptocurrencies, nor has it issued an announcement regarding the sale of virtual currencies.
On May 25, at the Meitu performance conference, Meitu CEO Wu Xinhong stated that there is currently no plan to continue investing in cryptocurrency, because the board of directors approved the amount of 100 million US dollars, and only these amounts are available for the time being.
Since the beginning of this year, Meitu’s stock price has also fluctuated continuously with the rise and fall of cryptocurrencies. After Meitu announced its heavy holding of cryptocurrency in March, the stock price of Meitu rose by more than 14% on March 8. Since May, the stock price of Meitu has fallen all the way. As of press time, Meitu’s stock price is 2.04 Hong Kong dollars per share, which has plummeted 55% from this year’s high of 4.50 Hong Kong dollars per share.
At the performance conference, Wu Xinhong also stated that “purchasing cryptocurrency is more about asset allocation and the layout of overseas business, and will not conduct short-term operations.”
This means that Meitu will not sell cryptocurrencies in the short term, but the violent volatility of the cryptocurrency market may be an untimely bomb for Meitu.
Meitu speculation in coins
“Everyone regretted that they missed Tencent, and regretted why they didn’t buy Tencent. Seeing that it has risen from HK$3.7 to the present. This is also likely to be repeated in Meitu. From the perspective of the number of users, Meitu also has enough room. “In 2016, Cai Wensheng made such a bold statement when Meitu went public.
But now, not only has the stock price of Meitu fallen below the issue price for a long time, its number of users has also shrunk dramatically.
According to Meitu’s 2020 financial report, Meitu’s total monthly active users were 261 million, a year-on-year decrease of 7.6%. In this regard, Meitu explained that most of the decline was due to the decline in monthly active users in India, because several applications were banned by the Indian government.
In terms of products, the number of users of each of Meitu’s products has shown a downward trend. In 2020, Meitu’s monthly active users were 115 million, a decrease of 1.5% compared with 116 million in 2019; the monthly active users of Beauty Camera were 61.85 million, a decrease of 7.4% compared with 66.8 million in 2019.
Not only is the number of domestic product users declining, but the monthly active users of Meitu’s overseas product BeautyPlus (beauty camera overseas version) also fell to 55.14 million, a 16.6% drop from 66.14 million in 2019.
Perhaps the continued downturn in the main business has brought about operating pressure. Cai Wensheng, who had been exposed to Bitcoin as early as 2011, began to take risks, and wanted to create profits for the company by investing in Bitcoin.
Once upon a time, Cai Wensheng, a venture investor, invested in okcoin in 2014 and bought the first bitcoin. After that, Cai Wensheng mingled with many high-end blockchain players and began to firmly believe that the blockchain is the future.
To this end, at the beginning of 2018, Meitu released a white paper on blockchain solutions, stating that it would build a blockchain ecosystem based on AI technology; in February, Meitu also launched a blockchain wallet product “Baike Wallet”.
Cai Wensheng was not idle either. He was actively discussing blockchain technology in the famous “Three O’clock Sleepless Blockchain Group” at the time.
In a group sharing, Cai Wensheng bluntly said: “Blockchain is the biggest bubble in human history…and the bubble is also a catalyst for the technological revolution…every time after the bubble, these industries can Really change the development of this world. We can only embrace the bubble, and not participating is the biggest risk.”
Today, Cai Wensheng chooses to embrace the bubble, but this bubble is not easy to control.
The ups and downs of cryptocurrency have been staged many times as early as many years ago. On a certain day in April 2013, Bitcoin plunged from US$233 to US$67 within 24 hours, a drop of 71%. The direct cause of this accident was the problems of the trading platform Mt.Gox and hacker attacks.
In November of that year, the price of Bitcoin suddenly rose from a stable around 120 yuan to 1,150 US dollars. When everyone was ecstatic, in mid-December, the price of Bitcoin was directly cut in half.
Combining the history after the birth of Bitcoin, it can be found that cryptocurrencies have experienced huge rises and declines, and there are many influencing factors. For example, exchanges encountered hacker attacks, market corrections, and policy supervision risks will all affect the price of cryptocurrencies.
This time, Meitu also suffered serious losses because of the collapse of cryptocurrencies. It is worth noting that as a listed company, Meitu’s funds used to invest in cryptocurrencies are also partly raised by the stock market, which means that Meitu In fact, investors’ money is used to invest in cryptocurrencies.
Using stockholders’ money to buy cryptocurrency, the profit is the company’s profit, and the stockholders will bear part of the risk if they lose it. This will naturally cause controversy.
Cai Wensheng’s radical style also made Meitu suffer a lot.
In 2018, after Cai Wensheng, the chairman of Meitu, participated in the Meitu strategy conference uncharacteristically, he began to trade a series of business adjustments of Meitu, which mainly included the suspension of e-commerce business and the shutdown of mobile phone business.
You should know that mobile phones were Meitu’s most profitable business at the time, so the internal opposition was great, but the mobile phone business was still abandoned by Cai Wensheng, and Meitu has never been able to prove its profitability.
It was not until 2020 that Meitu announced the first full-year profit since its establishment, with a net profit of 60 million yuan that year.
However, behind the profit, Meitu’s main business has fallen into a growth bottleneck. In 2020, Meitu will achieve annual revenue of 1.2 billion yuan, of which online advertising revenue will be 680 million yuan, accounting for 56%. But compared to 2019, online advertising revenue has fallen by 9.5% year-on-year.
It can be seen that Meitu not only showed weakness in its main business, but also failed to find a new growth point. Now that Cai Wensheng is making a dangerous move again, Meitu may no longer be able to withstand the toss.
Beautiful pictures in trouble
As a tool product, Meitu has a considerable number of users. When it went public in 2016, Meitu had accumulated 450 million monthly active users. But it is also because as a tool product, Meitu has always been stuck in a commercial dilemma.
Because of this, Meitu has been making various commercialization attempts.
In 2013, Meitu released the first MeituKiss smart phone. At that time, the domestic mobile phone market was not stable, and various brands emerged. Meitu phones have won many markets with their excellent shooting functions. That year, smart hardware brought 51.3 million yuan in revenue to Meitu, which also opened a three-year high-growth dividend period for Meitu smart hardware.
By the time Meitu went public in 2016, smart hardware revenue had reached 1.473 billion yuan, accounting for 93.4% of total revenue. However, smart hardware revenue did not increase profitably. Meitu’s mobile phone business has been at a loss. In addition, the domestic mobile phone industry has gradually stabilized, focusing on taking pictures. Meitu mobile phones are gradually being squeezed out of the market.
In 2019, Meitu Mobile issued a farewell letter, stating that it will close its mobile phone business in the middle of the year and license the brand exclusively to Xiaomi Group. However, in Meitu’s 2020 financial report, Wu Xinhong stated that the exclusive license with Xiaomi has ended, and Meitu will no longer enter the mobile phone manufacturing and sales industry in the future, and Meitu will withdraw from the mobile phone business.
In addition to the mobile phone business, Meitu’s short video product “Meipai” has also declined in the trend of the times.
As early as 2014, Meitu launched the short video product “Meipai”. At that time, it was the champion of the App Store free list, and its highest monthly activity reached 150 million. It also became the traditional short video three giants with Miaopai and Kuaishou. .
However, Meipai did not maintain the momentum of high opening. In 2015, Meipai was indirectly blocked by Sina Weibo, and the Weibo users shared using Meipai were only visible to the blogger. This greatly affected Meipai. Since then, it has been actively used on Android and iOS due to ineffective rectification of content violations. The app store was stopped for 30 days, which dealt a fatal blow to Meipai.
The number of paying users of Meipai has dropped from more than 300,000 to around 130,000, and its commercialization capabilities have shrunk sharply.
At the same time, Meitu’s core product, Meitu Xiuxiu, has also lost its competitiveness with the continuous improvement of smartphone shooting performance. Moreover, as a tool product, Meitu Xiuxiu has difficulty in achieving better liquidity.
When it is difficult to commercialize its main business, Meitu has been exploring new monetization channels. It has tried various industries such as e-commerce, social networking, and medical beauty.
In 2017, Meitu entered the e-commerce business and launched “Meipu”, a B2C2C buyer model, and a personalized customization platform “Meitu Custom”. However, due to unclear positioning, Meitu failed to achieve the expected results.
Meitu quickly transformed the beauty shop into “Meitu Beauty”, which focuses on AI skin measurement functions. It wanted to achieve a closed loop of self-operated e-commerce by recommending makeup and skin care products, but also because the effect was not obvious, the operation was closed soon.
Meitu Customization was originally intended to provide users with customized picture product services through the massive pictures generated in the Meitu series shooting software, such as printing and dyeing pictures on pillows, shirts, etc., but this idea soon proved to be a pseudo-need. The map customization is also quickly out of service.
Since then, Meitu has begun to implement the “Meihe Social” strategy, with the intention of turning Meitu Xiuxiu from a tool product into a social product, and at the same time it announced its entry into the medical beauty industry.
Obviously, Meitu’s various commercialization attempts did not help it out of its predicament, but instead aggravated its losses.
Relevant data shows that from 2013 to 2019, Meitu has a cumulative loss of 12.126 billion yuan. Especially between 2016 and 2019 before and after the listing, the company’s net profit lost 6.261 billion yuan, 197 million yuan, 1.255 billion yuan and 397 million yuan respectively.
Today’s Meitu, it can be said that its main business is facing a decline, and new businesses are still being explored. Under multiple pressures, Meitu may hope to invest in Bitcoin to turn around, but this is obviously unrealistic.
The sharp rise and fall of the cryptocurrency industry will not only affect the company’s financial situation, but may also affect the company’s original operations.
A stable and growing business is an important indicator for a company’s survival. This is something Meitu must continue to explore.
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.