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What Does JOYY Inc.'s (NASDAQ:YY) Share Price Indicate?

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Simply Wall St
·3 min read
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JOYY Inc. (NASDAQ:YY), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at JOYY’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for JOYY

What is JOYY worth?

According to my valuation model, JOYY seems to be fairly priced at around 2.8% below my intrinsic value, which means if you buy JOYY today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $111.53, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, JOYY’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from JOYY?

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of JOYY, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Currently, YY appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on YY for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on YY should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing JOYY at this point in time. For instance, we've identified 5 warning signs for JOYY (1 is a bit unpleasant) you should be familiar with.

If you are no longer interested in JOYY, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.