Meitu buys another US$10 million Bitcoin. The cumulative profit may exceed 200% of last year’s net profit
On the evening of April 8, Meitu, a Hong Kong-listed company, issued an announcement stating that its wholly-owned subsidiary, Meitu Hong Kong had once again purchased Bitcoin as an investment in the open market transactions, with a total consideration of approximately US$10 million. The cumulative purchase amount reached the purchase limit of the investment plan in the previous announcement (i.e. US$100 million).
Prior to this, Meitu had purchased cryptocurrency twice on March 7 and March 17, but this time it did not purchase Ether as it did during the last two admissions. The announcement stated that the purchase of Bitcoin was paid in cash, and the source of funds was the existing cash reserves.
The details of the three purchases are as follows:
In the first purchase on March 7, Meitu purchased more than 379 bitcoins, with an average purchase price of US$47,214; it purchased 15,000 ethers with an average price of US$1,473. During the second purchase on March 17, Meitu purchased more than 386 bitcoins, with an average price of US$55,946; it purchased 16,000 ethers, with an average price of 1775 US dollars. This time, it purchased more than 175 bitcoins, with an average price of US$56,922.
If calculated three times cumulatively, Meitu currently holds more than 940 bitcoins, with an average purchasing price of approximately US$52,610. It also holds 31,000 ether, with an average purchasing price of approximately US$1,629.
A website (www.guancha.cn) calculates based on market data. Without considering the handling fee, if Meitu did not lighten its position, the above investment has recorded a floating profit of US$19.634 million, or about 129 million yuan, which is 210% of the total net profit of Meitu in 2020, which is 60.9 million yuan.
Meitu revealed that the settlement of further bitcoin purchases will be completed on April 8, 2021, immediately after the purchase order is placed. The bitcoin units purchased by the company will be deposited on a well-known cryptocurrency trading platform established with good security measures.
However, the announcement also mentioned that despite the long-term positive prospects of blockchain, the price of cryptocurrencies will still fluctuate in the short term. Therefore, the company has decided to invest in Ethereum and Bitcoin, which have the largest market capitalization, to improve long-term shareholder value.
Meitu also complimented Bitcoin in the announcement. It stated that Bitcoin has multiple functions that make it an alternative to a good store of value, such as limited supply, convertibility into fiat currency or goods and services, portability, and effective hedging tool against the devaluation pressure on fiat currency due to central banks actively increasing the money supply. Some of these features may even make Bitcoin better than store off value alternatives (e.g. gold, gems, and real estate). The convenience of cryptocurrency access has also been improving, which is reflected in the fact that well-known banks also provide cryptocurrency trading and custody services. Regulators have also started to license cryptocurrency trading platforms to increase investor confidence in trading cryptocurrencies.
In fact, Meitu is not the world’s first listed company to invest in tokens. In early February, Tesla announced the purchase of US$1.5 billion worth of Bitcoin. In the 10K file submitted to the U.S. SEC at that time, Tesla explained the reason for the purchase as “according to the updated investment policy, the decentralization and maximum return on the company’s non-investment cash assets,” and the company also stated in the report that it will accept Bitcoin as a means of payment when permitted by law and reality.
MicroStrategy, a listed company in the US stock market, is even more aggressive. Earlier, the company announced that it would convert its main capital reserves into Bitcoin. On April 6, U.S. Eastern Time, the company’s latest announcement showed that it bought 253 bitcoins again. The purchase price after accounting for expenses is approximately US$59,339, which makes the company currently hold approximately 91,579 bitcoins, valued at US$2.23 billion.