Meitu Invests $40 Million in Cryptocurrency

Meitu Diversifies into Cryptocurrency Investments

Mirroring a strategy recently adopted by Tesla, the Chinese application developer Meitu has entered the realm of cryptocurrency investment.

Dominance and Subsequent Challenges

During the early part of the 2010s, Meitu achieved significant prominence in the field of portrait enhancement. Its primary application became synonymous with “photo beautifying” within China. However, with the integration of filters directly into smartphones, applications like Meitu have faced increasing difficulty in maintaining their market leadership.

Consequently, Meitu’s stock value has declined considerably, falling from HK$18 per share in 2017 to under HK$3 currently.

Seeking New Avenues for Growth

As the company reaches its 13th anniversary, Meitu is actively exploring alternative growth strategies, with a particular focus on cryptocurrency.

Significant Cryptocurrency Purchases

On March 5th, Meitu executed open market transactions to acquire 15,000 units of Ether and 379.1214267 units of Bitcoin. These purchases are valued at approximately $22.1 million and $17.9 million respectively.

This initial investment represents the first portion of a broader plan to allocate up to $100 million towards cryptocurrency, funded through the company’s existing cash reserves.

Chairman’s Long-Standing Support

Meitu’s chairman, Cai Wensheng, has consistently voiced his support for blockchain technologies. Despite China’s restrictions on initial coin offerings and cryptocurrency exchanges, Cai revealed in 2018 that he had personally invested in around 10,000 bitcoins.

Rationale Behind the Investment

The company articulated its reasoning for this investment in a recent disclosure, stating:

“The Board believes that blockchain technology possesses the capacity to fundamentally alter both the financial and technological landscapes, much like the mobile internet revolutionized the PC internet and numerous offline industries.”

The statement continued: “The Board views the blockchain industry as being in a nascent phase, comparable to the mobile internet industry around 2005, and therefore believes cryptocurrencies have substantial potential for value appreciation.”

Furthermore, diversifying its cash holdings into cryptocurrencies is seen as a prudent treasury management strategy.

Future Blockchain Integration

Meitu clarifies that the Bitcoin investment is part of a broader “asset allocation” strategy. The investment in Ether is intended to support the company’s wider blockchain initiatives.

These initiatives include exploring the integration of blockchain technology into its international operations, potentially through Ethereum-based dApps. Meitu is also considering investments in overseas blockchain projects that could benefit from its extensive user base.

Extensive User Base

As of June 2020, Meitu reported having nearly 300 million monthly active users across its global suite of applications.

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