Meitu Books $80M Profit on Crypto Sale

On the evening of December 4, a groundbreaking announcement from Meitu Inc., traded under 1357.HK on the Hong Kong Stock Exchange, sent shockwaves through the financial marketsThis mobile technology company revealed that it would begin liquidating its cryptocurrency holdings starting in November 2024. After a brief trading period that concluded just under a year later, Meitu successfully divested itself of all its cryptocurrency assets, encompassing around 31,000 Ethereum and approximately 940 BitcoinThis strategic move resulted in a remarkable cash influx totaling roughly $180 million, netting about $79.63 million in profits — a figure that translates to approximately 571 million yuan at current exchange rates.

Meitu's board has meticulously crafted a plan for the substantial funds acquired from the saleApproximately 80% of the net proceeds will be allocated to pay a special dividend to shareholders, with a proposal to distribute about 0.109 Hong Kong dollars per share

This plan is poised to enhance shareholder value and bolster the company's attractiveness in the eyes of investorsThe remainder of the profits from the sale will be earmarked for general operating capital, underpinning the company's efforts to expand its subscription-based imaging and design product services, which have become increasingly vital in Meitu's overall business strategyThe growth trajectory of these services has been notably robust in recent years.

Meitu’s venture into cryptocurrency began in early 2021, when the company first made headlines by purchasing digital currencies in the open marketOn March 5 of that year, they disclosed an investment of $22.1 million in Ethereum and $17.9 million in BitcoinThis buying spree continued with further acquisitions later in March and into April, ultimately amassing a substantial total of about 31,000 Ethereum and 940.89 Bitcoin, with an aggregated cost of around $100 million — $50.5 million for Ethereum and $49.5 million for Bitcoin.

Revealing details from the company's financial statement for the first half of 2024 illustrates Meitu's performance, with adjusted net profits attributable to shareholders rising to 270 million yuan, marking an impressive year-on-year growth of 80.3%. Moreover, the total number of paid subscription users crossed 10.81 million, an increase of 50.1%. Revenue from the company's subscription-driven imaging and design services reached 930 million yuan, accounting for 57.4% of the total revenue, and showcasing robust growth of 54.5% year-on-year.

Following this significant move, the stock price of Meitu saw a 6.29% increase, closing at 3.04 Hong Kong dollars per share on December 5. Notably, this surge in share price coincided with Bitcoin reaching a historic milestone by surpassing the $100,000 mark earlier that day, rising by approximately 4% over 24 hours

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The cryptocurrency has seen a staggering accumulated increase of 138% within the year, surging from $68,000 to $100,000 in just a month's span since November 4.

In a related context, during the DealBook/Summit conference hosted by the New York Times this same day, Federal Reserve Chair Jerome Powell offered insights into the cryptocurrency landscapeHe emphasized that Bitcoin competes with gold rather than the U.Sdollar, likening Bitcoin to virtual goldPowell remarked that despite its increasing prominence, Bitcoin has not been widely adopted as a medium of exchange or a stable store of value, largely due to its volatile nature.

Despite the excitement surrounding Bitcoin's rally, experts caution against the inherent risks lurking beneath the surfaceYu Jianing, Co-Chairman of the Blockchain Committee of the China Communications Industry Association, warned that the combination of high volatility and excessive leverage represents a significant risk in the crypto market

As euphoria mounts in bullish markets, investors may be inclined to utilize leverages to amplify returns, which can lead to rapid accumulation of risks and consequent market panic if the tide turns.

Researcher Zhao Wei from the OKX Research Institute echoed these sentiments, noting that while Bitcoin appears to be on a vigorous upward trajectory, its sustainability hinges on investor sentiment regarding favorable news and the evolving monetary policies of major developed nationsZhao indicated that in the short term, Bitcoin could see significant fluctuations and instability.

As the world watches this dynamic market closely, Meitu's actions showcase a pivotal moment in the intersection of traditional tech and digital currenciesThe unfolding narrative of Meitu serves as a vivid illustration of the evolving landscape for emerging technologies and the strategic maneuvers companies are making to capitalize on the fluctuating tides of cryptocurrency markets