Cryptocurrency investments have once again thrust Meitu into the spotlight, this time due to significant financial losses.
On July 3rd, Meitu Inc. (HK1357) announced an impairment loss of approximately $45.6 million (¥306 million) from its Ethereum and Bitcoin holdings—$18.5 million and $27.1 million, respectively. This isn’t the company's first crypto-related setback. In 2021, its net losses surged by 450.8% year-over-year, primarily due to declining cryptocurrency valuations.
Despite these losses, Meitu maintains optimism about the long-term potential of its crypto assets, citing recent price volatility as temporary.
The Rollercoaster Ride of Meitu’s Crypto Journey
In March 2021, Meitu became one of the first Hong Kong-listed companies to adopt Bitcoin and Ethereum as part of its treasury strategy. Chairman Cai Wensheng publicly endorsed the move, calling it a pioneering step. However, the results have been mixed:
- Initial Investment: $50.5 million in Ethereum (31,000 units) and $49.5 million in Bitcoin (~940.89 units), totaling $100 million.
- 2021 Performance: Crypto holdings contributed to a 450% spike in net losses mid-year but later added ¥425.6 million in fair value gains by year-end.
- 2022 Update: The company reported its second consecutive annual profit on adjusted metrics, though crypto impairments now account for 40% of its 2021 advertising revenue.
👉 Explore secure crypto investment strategies
Meitu’s Struggles Beyond Crypto
Meitu’s path to profitability remains rocky. Since its 2016 IPO, the company has yet to achieve consistent net profits. Key challenges include:
- Business Pivot: Transitioning from consumer-focused apps (like MeituPic) to B2B SaaS services for beauty and imaging.
Revenue Shifts:
- Advertising revenue dropped to 46% of total income in 2021 (down from 57% in 2020).
- VIP subscriptions and imaging SaaS grew 146.9% to ¥520 million, now representing 31.2% of revenue.
- Competitive Pressures: Faces rivals like Youzan and Weimob in beauty SaaS, while its imaging tools compete with rising apps like XiuTu and Lightroom.
Financial Snapshot (2021)
| Metric | Value (¥) | Change YOY |
|---|---|---|
| Online Ad Revenue | 766 million | -11% |
| VIP & SaaS Revenue | 520 million | +146.9% |
| R&D Expenses | 545 million | +36% |
FAQs: Meitu’s Crypto Strategy
Q: Why does Meitu keep investing in cryptocurrency despite losses?
A: The company views price swings as short-term fluctuations and believes in blockchain’s long-term value.
Q: How has crypto impacted Meitu’s stock price?
A: Shares fell 10.58% to HK$0.93 following the July 3 announcement, with market cap at HK$4.1 billion.
Q: What’s next for Meitu’s SaaS business?
A: Expansion into commercial imaging tools (e.g., Meitu Cloud Retouch) and leveraging AI for B2B solutions.
Key Takeaways
- Meitu’s crypto losses highlight the risks of corporate digital asset investments.
- Strategic shifts to SaaS show promise but require heavy R&D and face stiff competition.
- The company’s resilience hinges on balancing innovation with financial discipline.