Meitu's stock opened higher recently following the company's announcement of a major cryptocurrency investment. On March 5, the Chinese tech firm purchased:
- 15,000 Ethereum (ETH) units: ~$22.1 million
- 379.1214267 Bitcoin (BTC): ~$17.9 million
This $40 million acquisition falls under Meitu's approved crypto investment plan, allowing up to $100 million in cryptocurrency purchases using existing cash reserves.
The Blockchain Bet: Meitu's Strategic Pivot
Riding the Crypto Wave
Since late 2020, Bitcoin's price surged from $10k to $57k (currently ~$50k), sparking renewed interest in blockchain stocks. In February 2021, Meitu's shares tripled from HK$1.5 to HK$4.5 after being labeled a "blockchain concept stock" - its brightest moment since selling its core smartphone business in 2018.
👉 Why are companies like Tesla and Meitu investing in crypto?
Board's Blockchain Vision
Meitu's directors compared blockchain's disruptive potential to:
- Mobile internet's impact on PC internet (circa 2005)
- Current crypto market resembling early-stage tech adoption
Key rationales for the investment:
- Asset diversification: Hedge against currency devaluation from quantitative easing
- Technological positioning: Demonstrate commitment to innovation
- Strategic reserves: ETH facilitates future dApp development
Comparative Analysis: Meitu vs. Tesla
| Company | Crypto Investment | Strategic Purpose |
|---|---|---|
| Tesla | $1.5B in BTC | Payment integration & liquidity |
| Meitu | $40M in ETH+BTC | Blockchain ecosystem development |
While Tesla pioneered corporate BTC adoption, Meitu becomes Hong Kong's first listed company to hold ETH as reserve currency.
Leadership's Crypto Connections
Chairman Cai Wensheng's blockchain history includes:
- 2018: Launched controversial "Beauty Chain (BEC)" project
- Investments in OKEx (major crypto exchange)
- Personal reputation as "crypto whale" with mixed reception
Despite earlier blockchain white papers (2018's MIP project), Meitu's internal progress reportedly stalled until this recent move.
Challenges Ahead
User decline: MAUs dropped to 295M (from peak 450M+)
- Meituxiu: 121M
- Meipai: Just 5.62M
- Post-smartphone struggles: Lost primary revenue stream
- Investor skepticism: Shares still 70% below IPO price
👉 How do cryptocurrency investments affect company valuations?
FAQ: Meitu's Crypto Strategy Explained
Q: Why invest in both Bitcoin and Ethereum?
A: BTC serves as digital gold/store of value, while ETH enables smart contracts for future dApp development.
Q: Is this just hype chasing?
A: While timing coincides with crypto mania, Meitu cites long-term blockchain integration plans for overseas operations.
Q: How much crypto can Meitu afford?
A: With $380M cash reserves (2020 data), this $40M purchase represents ~10.5% allocation.
Q: What's the risk factor?
A: Crypto's volatility could impact balance sheets - Meitu's "net purchase" calculation aims to mitigate this.
Conclusion: Calculated Gamble or Last Resort?
This $40 million bet reflects Meitu's urgent need for relevance after losing its smartphone cash cow. While blockchain offers theoretical transformation potential, success hinges on:
- Actual product development (beyond token purchases)
- Reversing user decline trends
- Managing crypto's inherent volatility
As Cai Wensheng stakes his reputation on this pivot, the coming months will reveal whether Meitu evolves into a blockchain leader or becomes another cautionary tale in corporate crypto experimentation.