In a candid interview with LatePost, Meitu CEO Wu Xinhong opened up about the company’s controversial foray into cryptocurrency investment — a move that, despite generating substantial financial returns, ultimately brought more complications than benefits.
Wu confirmed that he personally supported the decision to invest in digital assets during a board meeting, citing strong potential for investment returns. The bet paid off: by the end of last year, Meitu had sold its entire crypto portfolio, realizing a profit of 570 million yuan (approximately $80 million). Of that gain, 80% was distributed back to shareholders as dividends — a significant return on capital.
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Yet, reflecting on the experience, Wu expressed regret over how the funds were used. “If I could go back in time,” he said, “I’d probably prefer to use that money to acquire or partner with teams that could synergize with our core business.” Instead of speculative gains, he now sees greater long-term value in strategic growth — particularly in areas like AI, photo editing technology, and user experience innovation.
The Hidden Cost of Crypto on Stock Performance
One of the most unexpected outcomes of Meitu’s crypto investment was its impact on investor perception and stock price volatility. Despite clear improvements in operational performance and product development, the company found its market valuation increasingly tied not to fundamentals, but to the fluctuating price of Bitcoin.
“There were times when our financials and user metrics showed real progress,” Wu explained, “but then Bitcoin dropped sharply — and our stock fell right along with it, even though we had already exited the position.” Conversely, during periods of rising crypto markets, Meitu’s share price often failed to gain momentum, suggesting a disconnect between actual business performance and market sentiment.
This misalignment created frustration among management and diluted the company’s ability to communicate its true value proposition to investors.
Market Perception vs. Business Reality
Meitu’s experience highlights a broader challenge faced by public companies dabbling in digital assets: once a firm is labeled a “crypto investor,” it becomes difficult to shake off that identity — even after exiting positions.
Investors began treating Meitu less as a tech-driven imaging and beauty app provider and more as a proxy for Bitcoin exposure. Analysts focused less on user growth, ARPU (average revenue per user), or AI advancements, and more on balance sheet allocations to crypto reserves.
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This shift in narrative undermined years of effort to build Meitu as a global consumer brand rooted in creativity and visual technology. The irony? A short-term financial win ended up clouding long-term strategic clarity.
Strategic Lessons for Tech Companies
Wu’s reflections offer valuable lessons for other tech firms considering alternative investments:
- Short-Term Gains Can Distort Long-Term Vision
While crypto investments may boost balance sheets quickly, they risk distracting from core product development and innovation. - Investor Narratives Are Hard to Control
Once associated with volatile assets, a company may struggle to reposition itself based on fundamentals alone. - Capital Allocation Should Align With Mission
Money earned should ideally fuel growth in areas directly tied to the business — such as R&D, talent acquisition, or ecosystem expansion. - Transparency Builds Trust — But Doesn’t Eliminate Bias
Even with full disclosure and timely exits, market biases persist. Perception often outweighs reality in public markets.
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Frequently Asked Questions (FAQ)
Q: Did Meitu still hold any cryptocurrency at the time of this statement?
A: No. Meitu sold its entire cryptocurrency portfolio by the end of the previous year and no longer holds any digital assets on its balance sheet.
Q: How much did Meitu earn from its crypto investments?
A: The company realized a total profit of 570 million yuan (~$80 million), with 80% of those gains distributed to shareholders.
Q: Why does Wu Xinhong regret the investment decision?
A: While financially successful, the investment led to unwanted market perceptions and stock volatility unrelated to business performance. He believes the capital could have been better used to strengthen Meitu’s core technology and product offerings.
Q: Is investing in crypto risky for public companies?
A: Yes. Beyond market volatility, such investments can distort investor perception, affect stock price stability, and divert attention from operational achievements.
Q: Could crypto investments ever align with a tech company’s strategy?
A: Potentially — if tied directly to blockchain-based products, payment systems, or Web3 initiatives. However, speculative holdings without strategic integration carry reputational and financial risks.
Q: What is Meitu focusing on now instead of crypto?
A: The company is prioritizing AI-powered imaging tools, beauty tech innovations, international expansion, and enhancing user engagement across its app ecosystem.
Moving Forward: A Return to Core Values
Today, Meitu is refocusing on what it does best: empowering users through creative tools powered by artificial intelligence and advanced image processing. The episode serves as a cautionary tale about the unintended consequences of financial experimentation — especially when it overshadows years of product-driven progress.
For executives weighing similar moves, Wu’s message is clear: profitability isn’t just about returns on investment — it’s about preserving strategic focus, brand integrity, and investor trust.
As digital finance continues to evolve, so too must corporate governance and communication strategies. Companies must ask not only can we invest? but should we — and whether the answer aligns with their long-term vision.
In an era where markets react faster than ever to macro trends, staying true to core business values may be the smartest investment of all.