Cryptocurrencies surged past $60,000, prompting Meitu to double down on its investments!
On March 17, Meitu Company announced that its wholly-owned subsidiary, Miracle Vision, invested an additional $50 million in cryptocurrencies. This brings Meitu’s total cryptocurrency holdings to approximately $90 million (around RMB 580 million).
Why Bitcoin and Ethereum?
When asked about the rationale behind purchasing Bitcoin and Ethereum, a Meitu spokesperson directed attention to the company’s official announcement, which highlighted two key reasons:
- Blockchain Expansion: Ethereum investments align with Meitu’s strategy to enter the blockchain industry, including potential decentralized applications (dApps) and blockchain-based projects.
- Asset Diversification: Bitcoin serves as part of Meitu’s treasury management strategy, mirroring trends where institutions like insurers and asset managers increasingly adopt cryptocurrencies.
Meitu’s Financial Struggles
Despite early success as a pioneer in photo-editing apps, Meitu has faced significant challenges:
- Chronic Losses: From 2013 to 2019, cumulative losses reached RMB 12.1 billion ($1.7 billion).
- Stock Price Decline: After peaking at HK$23 in 2017, shares plummeted, lingering near HK$1 in 2019–2020 before a modest recovery in 2021.
- Failed Pivots: Attempts to diversify into social media (live streaming), gaming, e-commerce, and even medical aesthetics yielded little traction.
The Cryptocurrency Gamble
Meitu’s chairman, Cai Wensheng, a known figure in crypto circles (linked to OKEx and FCoin exchanges), spearheaded this move. Analysts speculate:
- Short-Term Hype: The timing—buying at near-all-time highs—raises concerns about volatility and speculative motives.
- Long-Term Potential: Meitu’s board likens blockchain’s current stage to mobile internet in 2005, betting on long-term appreciation.
Key Data:
| Investment Date | Ethereum Purchased | Bitcoin Purchased | Total Spent (USD) |
|-----------------------|--------------------|-------------------|-------------------|
| March 5, 2021 | 15,000 ETH | 379 BTC | 40 million |
| March 17, 2021 | 16,000 ETH | 386 BTC | 50 million |
Skepticism and Risks
Critics argue:
- No Tech Advancement: Buying crypto doesn’t equate to blockchain innovation.
- Market Timing Risk: With Bitcoin’s volatility, returns are uncertain.
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FAQ Section
Q: Is Meitu’s crypto investment legally compliant in China?
A: While China prohibits crypto trading, Meitu’s subsidiary operates overseas, circumventing local restrictions.
Q: Could this revive Meitu’s stock price?
A: Initial announcements caused short-lived spikes (+14% then -6.27%), but sustained impact depends on crypto market trends.
Q: What’s next for Meitu?
A: The company may explore blockchain-based services, though its core app monetization remains unresolved.
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Conclusion
Meitu’s $90 million crypto bet reflects desperation for growth amid fading core revenues. Whether this gamble pays off hinges on blockchain’s evolution—and Bitcoin’s unpredictable swings.