COVER Corporation (5253) AI Stock Analysis

• Market Cap: ¥99.79B
• Dividend Yield: N/A
• Average Volume (3M): 1.51M
• Price to Earnings (P/E): 17.9
• Beta (1Y): 0.94
• Revenue Growth: 37.31%
• EPS Growth: 13.66%
• Country: JP
• Employees: 537
• Sector: Technology
• Sector Strength: 88
• Industry: Media & Entertainment
• EPS (TTM): 19.89
• Shares Outstanding: 65,650,100
• 10 Day Avg. Volume: 1,165,330
• 30 Day Avg. Volume: 1,509,356
• PEG Ratio: 0.87
• Price to Book (P/B): 8.87
• Price to Sales (P/S): 3.46
• P/FCF Ratio: 32.23
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: ¥2,350.00
• Price Target Upside: 23.29% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 73 Outperform
• Price Target: ¥2,050.00 ▲(7.56% Upside)

The score is primarily supported by strong financial performance (rapid growth, durable margins, and a debt-free balance sheet). This is tempered by a weaker technical backdrop (below longer-term moving averages and negative MACD) and a valuation that appears fair rather than clearly cheap (P/E ~19.5, no dividend yield data).

Positive Factors

Debt-free Balance Sheet

A zero-debt balance sheet materially lowers financial risk and provides durable optionality: the company can fund IP development, events, and partnerships from equity/cash, withstand demand shocks, and seize strategic investments without dependency on external financing.

Rapid Revenue Scale and Healthy Margins

Sustained multi-year revenue expansion with robust gross and operating margins indicates scalable monetization of VTuber IP, diversified monetization (merch, events, licensing), and structural demand for digital talent, supporting durable profit generation as the business grows.

Improving Cash Generation

Improved operating and free cash flow with strong conversion in FY2025 enhances the firm's capacity to reinvest in content, expand events/IP, and maintain balance-sheet flexibility, reducing reliance on external capital for growth initiatives.

Negative Factors

Volatile Free Cash Flow

Large swings in free cash flow complicate multi-period planning for event-driven and inventory-heavy operations. Persistent volatility can strain working capital, force opportunistic financing, and increase execution risk for multi-quarter content and event rollouts.

Margin Compression vs. Early Peak

Eroding net margins versus early peaks suggest rising content, talent, or event costs as scale increases. If cost growth outpaces revenue or pricing power weakens, margin pressure may persist, limiting reinvestment capacity and long-term return on capital.

Lower OCF-to-EBIT Efficiency Recently

A weakening OCF/EBIT ratio signals reduced earnings quality and potential working-capital or timing effects tied to events or platform receivables. This raises risk that reported profits are less cash-backed, constraining durable cash available for growth or shareholder actions.

COVER Corporation Business Overview & Revenue Model

Company Description

COVER Corporation is a Japanese technology and entertainment company primarily known for its virtual YouTuber agency, Hololive Production. The company operates in the digital entertainment, virtual reality, and live streaming sectors, providing innovative virtual experiences through its roster of virtual talents. These digital talents use advanced motion capture technology to engage with audiences worldwide, creating a unique blend of entertainment and technology.

How the Company Makes Money

COVER Corporation generates revenue through multiple streams, primarily driven by its Hololive Production agency. The company earns money from super chats, memberships, and subscriptions on platforms like YouTube, where fans financially support their favorite virtual talents. Merchandise sales, including apparel, figures, and other branded items, contribute significantly to revenue. Additionally, COVER Corporation collaborates with other companies for sponsorships and partnerships, further enhancing its income through brand collaborations and promotional content. The company also organizes live events, both virtual and physical, which serve as another revenue stream through ticket sales and exclusive event merchandise. These diverse income sources enable COVER Corporation to capitalize on the growing popularity of virtual entertainers and digital content.

COVER Corporation Financial Statement Overview

Summary

Strong fundamentals driven by rapid multi-year revenue growth and solid profitability. Balance sheet quality is excellent with zero debt and strong ROE, while the main offset is volatile free cash flow and uneven cash conversion in recent periods despite improvement in FY2025.

Income Statement

Revenue has scaled rapidly over the past several years (from 5.7B in FY2021 to 43.4B in FY2025), and profitability remains solid with FY2025 gross margin ~50% and operating margin ~17%. Net margin is healthy (~13%) but has come down from the peak levels seen in FY2021, indicating some margin compression as the business grew. Overall, the income statement shows strong growth and durable profitability, with the main watch item being the lower margin profile versus earlier years.

Balance Sheet

The balance sheet is very conservatively positioned with zero debt across all periods provided, which materially lowers financial risk. Equity has grown meaningfully alongside the business (2.2B in FY2021 to 16.9B in FY2025), and returns on equity are consistently strong (roughly ~33%–55% range), signaling efficient capital use. The primary limitation is that the dataset doesn’t provide liquidity detail (e.g., cash vs. short-term obligations), but based on what’s available, financial leverage risk is minimal and balance-sheet quality is high.

Cash Flow

Cash generation is positive and improving in absolute terms, with FY2025 operating cash flow of 5.3B and free cash flow of 4.7B. Free cash flow conversion versus net income strengthened sharply in FY2025 (~88%) after a weak FY2024 (~22%), showing better earnings-to-cash quality recently. However, free cash flow has been volatile year to year (declines in FY2023 and FY2024, then a strong rebound in FY2025), and operating cash flow relative to EBIT is modest in FY2024–FY2025 versus earlier years, which is a key item to monitor.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	46.61B	43.40B	30.17B	20.45B	13.66B	5.72B
Gross Profit	23.39B	21.80B	13.99B	9.40B	5.27B	2.78B
EBITDA	8.74B	8.41B	6.01B	3.53B	1.95B	1.72B
Net Income	5.63B	5.56B	4.14B	2.51B	1.24B	1.22B
Balance Sheet
Total Assets	31.39B	33.06B	22.71B	15.89B	8.24B	3.52B
Cash, Cash Equivalents and Short-Term Investments	11.75B	11.50B	8.67B	7.79B	4.64B	1.90B
Total Debt	0.00	0.00	0.00	0.00	0.00	0.00
Total Liabilities	13.75B	16.11B	11.57B	8.88B	4.78B	1.30B
Stockholders Equity	17.64B	16.95B	11.14B	7.00B	3.46B	2.21B
Cash Flow
Free Cash Flow	0.00	4.66B	1.07B	2.50B	3.05B	1.19B
Operating Cash Flow	0.00	5.29B	4.76B	4.87B	3.54B	1.42B
Investing Cash Flow	0.00	-2.70B	-3.89B	-2.76B	-793.94M	-402.59M
Financing Cash Flow	0.00	244.00M	0.00	1.04B	0.00	526.88M

COVER Corporation Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1906.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:5253, the sentiment is Negative. The current price of 1906 is above the 20-day moving average (MA) of 1723.70, above the 50-day MA of 1627.04, and below the 200-day MA of 1936.76, indicating a bearish trend. The MACD of -25.39 indicates Positive momentum. The RSI at 34.73 is Neutral, neither overbought nor oversold. The STOCH value of 4.17 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:5253.

COVER Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2317	76 Outperform	¥168.51B	17.29	―	2.30%	13.82%	37.07%
6966	75 Outperform	¥137.79B	13.34	―	2.45%	4.60%	-21.64%
5253	73 Outperform	¥99.79B	17.90	―	―	37.31%	13.66%
6871	70 Outperform	¥339.55B	33.85	―	1.02%	29.60%	24.39%
4180	66 Neutral	¥99.51B	30.84	―	0.18%	25.88%	80.30%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4776	―	¥98.09B	16.72	―	1.02%	26.47%	142.77%