Bilibili (09626.HK) shares plummeted 5.13% in early trading on Friday in Hong Kong, following a 7.2% decline in its US-listed shares on Thursday. The sharp drop comes despite the company reporting better-than-expected second-quarter earnings, highlighting investor concerns about the company's future growth prospects.

According to the company's earnings report, Bilibili posted a non-GAAP earnings per share of CNY1.29, surpassing analysts' expectations of CNY1.20. Revenue for the quarter grew by 19.8% year-over-year to CNY7.34 billion, slightly above the forecasted CNY7.33 billion. The growth was primarily driven by an increase in daily active users, reinforcing Bilibili's position as a leading platform for high-quality content and user engagement.

Despite the positive earnings results, investors seem to be taking a cautious stance. The sell-off may indicate that market expectations were even higher than the reported figures or that there are concerns about the sustainability of Bilibili's growth rate in the competitive Chinese tech landscape. As the company continues to navigate challenges in the online entertainment sector, investors will be closely watching for signs of continued user growth and improved profitability in the coming quarters.