Meitu's Bitcoin and Ethereum Sell-Off Yields Nearly RMB 600 Million in Profit: A Case Study in Successful Cryptocurrency Investment

Meitu's Bitcoin and Ethereum Sell-Off Yields Nearly RMB 600 Million in Profit: A Case Study in Successful Cryptocurrency InvestmentMeitu, Inc. recently announced the sale of its entire holdings of Bitcoin and Ethereum, totaling approximately 31,000 ETH and 940 BTC

Meitu's Bitcoin and Ethereum Sell-Off Yields Nearly RMB 600 Million in Profit: A Case Study in Successful Cryptocurrency Investment

Meitu, Inc. recently announced the sale of its entire holdings of Bitcoin and Ethereum, totaling approximately 31,000 ETH and 940 BTC. The sale generated nearly $180 million, yielding a profit of approximately $79.63 million (approximately RMB 571 million) compared to its acquisition cost of $100 million. This move has drawn significant market attention, resulting in a substantial surge in Meitu's stock price. This article will provide a detailed analysis of Meitu's cryptocurrency investment journey, its investment strategy, and the implications for the company's future development.

Meitu's Cryptocurrency Investment Journey: Buying High and Selling Higher

Meitu's foray into cryptocurrency investment began in 2021. At that time, Bitcoin and Ethereum prices were relatively high, yet Meitu counter-intuitively increased its holdings. On March 5, 2021, Meitu first announced the purchase of 15,000 ETH and 379.1214267 BTC for approximately $40 million. The company stated that this was aimed at diversifying risk and demonstrating its commitment to technological innovation.

Subsequently, Meitu continued to accumulate cryptocurrencies. On March 17, 2021, the company purchased another 16,000 ETH and 386.08581655 BTC for approximately $50 million. On April 8, 2021, Meitu's Hong Kong subsidiary purchased an additional 175.67798279 BTC for approximately $10 million. In total, Meitu invested approximately $100 million in cryptocurrencies.

However, the volatility of the cryptocurrency market significantly exceeded expectations. In 2022 and 2023, Bitcoin and Ethereum prices plummeted, resulting in substantial impairment losses for Meitu. In 2022, the company recognized impairment losses of approximately RMB 285 million. Despite this, Meitu opted to hold onto its assets rather than sell.

Strategic Liquidation: Timing and Profit Allocation

In 2024, Bitcoin prices rebounded strongly, surpassing previous all-time highs. Seizing the opportunity, Meitu began gradually selling its entire Bitcoin and Ethereum holdings in November 2024. By December 4, 2024, the company had completed the liquidation of all its crypto assets, realizing a total of nearly $180 million, with a net profit of approximately $79.63 million.

Meitu has a clear plan for this substantial profit. 80% of the net proceeds will be used to pay a special dividend of approximately HK$0.109 per share, expected to be distributed to shareholders in June or July 2025. The remaining 20% will be used as general operating capital to develop the company's image and design product business, primarily focused on a subscription-based model.

Meitu's Future Strategy: Focusing on Core Business

Meitu stated that it will focus more on the development of its core image and design product business and expects to achieve better business performance in the future. The success of its cryptocurrency investment has provided the company with ample funds to make bolder investments and innovations in its core business.

Comparison with Boya Interactive: Divergent Investment Strategies

Unlike Meitu, Boya Interactive, another Hong Kong-listed company, also holds a significant amount of Bitcoin. As of November 12, 2024, Boya Interactive held 2641 BTC and 15445 ETH, with a total cost of approximately $185 million. In contrast to Meitu's liquidation strategy, Boya Interactive opted for "rebalancing," exchanging some Ethereum for Bitcoin in pursuit of higher returns.

Boya Interactive's strategy reflects its long-term bullish outlook on the cryptocurrency market. However, this strategy also carries higher risks. If Bitcoin prices decline, Boya Interactive would face greater losses.

Conclusion: The Risks and Opportunities of Cryptocurrency Investment

Meitu's cryptocurrency investment case study demonstrates both the immense opportunities and the high risks associated with cryptocurrency investment. Meitu's success lies in its precise timing and risk management. By holding through the downturn and selling decisively during the upswing, it achieved substantial returns.

However, the cryptocurrency market is highly volatile, and investors need to carefully assess their risk tolerance and develop a sound investment strategy. Not all companies are suitable for cryptocurrency investment; for companies with weaker financial resources, the risks may significantly outweigh the potential rewards. Meitu's success is not a readily replicable model; investors need to make rational judgments based on their own circumstances.

Appendix: Summary of Key Data

• Meitu's Cryptocurrency Acquisition Cost: Approximately $100 million

• Meitu's Cryptocurrency Sale Proceeds: Approximately $180 million

• Meitu's Net Profit from Cryptocurrency Investment: Approximately $79.63 million (approximately RMB 571 million)

• Special Dividend Distribution Ratio: 80%

• Special Dividend per Share: Approximately HK$0.109

• Meitu's 2022 Adjusted Net Profit: RMB 110 million

• Meitu's 2023 Adjusted Net Profit: RMB 370 million

• Boya Interactive Bitcoin Holdings (as of November 29): Approximately 3183 BTC

This detailed analysis of Meitu's cryptocurrency investment is for informational purposes only and does not constitute investment advice. Investors should make independent judgments and decisions based on their own circumstances.