Chinese beauty editing app Meitu continues to see a slump in stock price after warning investors it expects to record a 99-to-154% increase in net loss for the first half of the year, primarily because of its crypto holdings.
The Cayman Islands-incorporated firm, which operates in Hong Kong, announced in March last year that it acquired 31,000 ether and 940.89 bitcoin for the price of around $50.5 million and $49.5 million respectively — making Meitu the first China-based company to bet big on crypto, according to Bloomberg. It says it’s neither bought nor sold any digital assets since.
Today, those holdings are worth around $35.6 million in ETH and $18.6 million in BTC, meaning Meitu expects a crypto loss of around $45.8 million. In its official warning to investors, it announced an expected total net loss of between $41 million and $52 million for the first six months of 2022 — up from a $20.5 million net loss in the first half of 2021.
Despite the profit warning and a crypto crash, Meitu said it remains optimistic about its heavy crypto bags: “The Board sees the recent volatility in Ether and Bitcoin prices as temporary and remain positive on the long-term prospects of the acquired cryptocurrencies.”
Founded by dotcom billionaire Cai Wensheng back in 2008, it’s grown into a veritable photo editing app with over six million downloads on the Apple Store. Its goal is to help users achieve artificial beauty standards. According to its website, Meitu is “promoting the popularity of the appearance culture.”
The app offers users several features which help alter people’s faces. For example, it will whiten teeth, smooth skin, and lighten skin tone.
- Meitu (1357) went public in 2016 on the Hong Kong stock exchange.
- Its stock peaked in March 2017, trading at 18 HKD ($2.29).
- Share price is down 43% year-to-date, from 1.68 HKD ($0.21) in July 2021 to 0.93 HKD ($0.12) at press time.
Meitu has more to worry about than crypto
According to Bloomberg, Meitu has experienced competition from other Chinese social media firms like ByteDance (which owns TikTok) and smartphone makers Xiaomi (Meitu also makes smartphones).
The outlet says total monthly active users for Meitu slipped by 12% in 2021. Its website reports that in December last year, there were 2.44 billion unique app downloads and 231 million monthly active users. Protos reporters were unable to download the app — it appears the tech is only available to Android users in certain regions.
Elsewhere, this summer’s crypto downturn has seen so-called “safe” investment vehicles rushed to the morgue. Major market makers like Celsius and Three Arrows Capital have succumbed to the cold chill of the crypto winter after Terra’s stablecoin collapsed and took the lender and hedge fund with it.
Coinbase’s share price has taken a major hit — its price is down around 85% since April last year, from $342 to $49.