On March 7, Xiamen-based app-maker Meitu announced it has purchased $22.1 million worth of Ethereum (ETH) and $17.9 million in Bitcoin (BTC) via open market transactions on March 5. The company’s total investment in cryptocurrency amounted to $40 million, or about 261 million yuan. Meitu became the first Hong Kong-listed company to make such a move, which was immediately met with criticism from Chinese netizens and investors alike.
Meitu noted that the investment was in accordance with a plan previously approved by the company’s board of directors under which Meitu can purchase cryptocurrencies with a net value of no more than $100 million. The funds came from the company’s existing cash reserves.
Once the news became public, netizens on public platforms such as Weibo rushed to express their disapproval, calling Meitu’s decision futile.
The capital market does not seem to support the move either. As of the close of Hong Kong stocks on March 8, Meitu’s share price fell 6.27% to 2.54 Hong Kong dollars.
The decision came right after EV-maker Tesla disclosed on the official website of the US Securities Regulatory Commission that they spent $1.5 billion to purchase Bitcoin. In addition to that, Tesla CEO Elon Musk has on numerous occasions publicly endorsed crypto, sending some coins’ valuations through the roof.
Researchers in the industry believe that Meitu is displaying typical speculative behavior. Bai Yupan, the founder of the UOC open source project, bluntly told Beijing Commercial Daily that, while Tesla’s size and profitability allow for risky investments, Meitu uses high-risk assets such as Bitcoin for speculation and might not be able to bear potential losses.
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However, Meitu is not a crypto novice either. The company has been showing interest in this new financial market at least since 2018, when it launched its first blockchain product – BEC Wallet.