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JOYY Inc. (YY)
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JPMorgan jacks its price target on JOYY (NASDAQ:YY) to $140, suggesting 65% upside in the shares. The team notes a 15% decline in the stock price since the Muddy Waters short report last week vs. a 2% gain for the MSCI China index.
JOYY has since announced a special dividend, and JPMorgan says the company has more value-accretive actions it could take. Another positive catalyst is last year's purchase of live-streaming app Bigo, and JPMorgan expects better-than-hoped results from this service.
Joyy's Operating Breakeven Point Came Earlier Than Expected, Morgan Stanley Says
BY MT Newswires
— 9:23 AM ET 11/23/2020
09:23 AM EST, 11/23/2020 (MT Newswires) -- Joyy Inc.'s ( YY ) operating breakeven point came earlier than expected with higher incremental gross profit to be invested for stronger revenue and user growth next year, Morgan Stanley said Monday.
In a note to clients, Morgan Stanley analysts described Joyy ( YY) as the "cheapest stock with the highest growth" among a group of Chinese social media platform providers they cover.
Morgan Stanley also expects a special dividend for Joyy ( YY ) shareholders from the pending sale of YY Live to Baidu (BIDU).
The Street has also revised revenue growth growth for the company's Bigo business to 110% for 2020 and 45% for 2021, according to the note.
If you look at the big picture, then there is no much that would worry you:
The same founder created Huya and recently sold it to Tencent, which is also a brilliant investor that has acquired a lot of fantastic businesses.
JOYY is able to pay a dividend, which is very rare for a social media company that is still growing fast. Other Chinese Internet companies that are paying a dividend are Tencent and Netease (no others that I can think of), and they are very successful companies too.
All these class action lawsuits will go away soon as YY reaches all time highs. You can’t sue for losing money with the stock constantly going up. As we get further away from the MW report, shorts will give up and the stock will keep squeezing upwards.
Muddy Waters will change its name to Toilet waters. Just wait and see. Carson Block will be the name of his jail cell block. :)
Analyst Actions: Nomura Adjusts Joyy's Price Target to $157 From $123, Keeps at Buy
MT NEWSWIRES – 8:41 AM ET 11/18/2020
From Seeking Alpha, seems clearwhat to do:
When factoring all this in, JOYY should have at least a market cap of $8.4 billion and $12 billion once the deal with Baidu goes through. Again, this is just based on the cash, equity stake and valuation of Bigo Live. It doesn't even include JOYY's other business in Hago and Likee (with its 100 million users).
1) $3.6 billion (Cash) + $825 million (Huya) + 4 billion (Bigo) = $8.4 billion
2) $3.6 billion (Cash) + $825 million (Huya) + $3.6 billion (Baidu) + 5 billion (Bigo) = $12 billion
While it will take some time for everything to get sorted out regarding Muddy Waters' short thesis, if JOYY is cleared, at current levels the shares provide investors one of the most compelling risk-reward opportunities in today's market. Shares are close to trading at cash value, and the company continues paying a quarterly dividend with a business (Bigo Live) that is on track to grow revenues by more than 100% year over year. Another big positive is that the company is seriously considering a potential secondary listing in Hong Kong next year.
Top Bullish Charts for November 2020 💰💵📈
Joy just refuted. This might go over 100 due to short squeeze. Everyone will be covering hard
How could this company be 90% fraud when two of the best three Chinese Internet giants just spent billions each buying HUYA (leading esports and live game streamer) and YY live from this company. There must be something hidden behind these accusations. This is a great company which ever way I look. yesterday's low at $70 would have been a great entry but no one would know what's going on at that moment.
Can someone go into what this means for there stock price if they just sold off there domestic cash cow, they are essentially valueing bigo and likee at 3.5 bill and taking the other 3.5 bill from Baidu to maintain there current mkt cap of 7bn? And we can probably expect some big dividend payments to come now that they have all this cash on the books?
You think any of these companies would invest
Morgan Stanley 3,490,243 Sep 29, 2020 7.23% 281,557,902
Capital World Investors 3,037,573 Sep 29, 2020 6.29% 245,041,013
Price (T.Rowe) Associates Inc 2,916,888 Jun 29, 2020 6.04% 258,290,432
Blackrock Inc. 2,525,888 Sep 29, 2020 5.23% 203,763,384
JOYY (NASDAQ:YY): Q3 Non-GAAP EPADS of $1.31 beats by $0.32; GAAP EPADS of $3.82 beats by $3.36.
Revenue of $925.9M (+1.6% Y/Y) beats by $45.9M.
As a person who have spent at least 20k through the platform. The money are real, the number of users may not, as there will be fake users. Many people have more than one account. The company would have to give free gifts(money) to lure people in at first, it really depend on how they realized the money they spent. It could be treat both as revenue or as expenses
I think we are ready to move up drastically in the weeks ahead. moving into the 100-108 range is key, then breaking through that. YY has been teasing us since June. Perhaps soon we get that large vertical move all of us longs have been waiting for?
MW has gotten 8 chinese companies delisted. GSX did actually tank from 130s to 70s and is STILL under SEC investigation (does the SEC waste time on flimsy allegations?). Bidu hasn't bought anything yet. They still have until 2021 to do their own DD. If there is any whiff of legitimacy to MW claims, Bidu can still easily back out. YY's paying users actually declined 4.7% in the September quarter, so there would be a motivation to try to stop the bleeding and provide robust stats in order to keep a buyer enticed.
...Lastly, this deal shows the true potential value of JOYY. YY China, with just around 40 million MAUs and with no growth in a massively competitive market, is being sold for $3.6 billion, representing a valuation of $90 per MAU. This signals a valuation of at least $4.5 billion for the international live streaming business based on 50 million international live streaming MAUs.
Overall, this sale is a major positive for JOYY, and the fact that the stock is only up around 8% on this news is quite disappointing.
Now that YY China is going to be acquired, there is really no need to discuss this business, so we'll be focusing on the Bigo business. Bigo reported a strong Q3, with livestreaming revenues continuing to show 131% growth despite the India ban.
It's good to see that revenues from developed markets are leading this growth, making up over 40% of Bigo Live's revenue and more than doubling overall revenue growth in the quarter. These revenues should command a higher multiple as they're usually more stable and increase over time as the standard of living increases in these developed countries.
If you look at the composition from developed markets, it's already well over 40%. Under the key components in developed markets are North America, European countries and also Japan, Korea, New Zealand, Australia. So, these three sub regions on the developed markets continue to drive a lot of the growth for Bigo Live.
Source: YY Q3 2020 call
Even better, not all of this revenue came from better monetization. Bigo Live, Hago, and Likee all showed impressive MAU growth, excluding India. Considering its maturity, Bigo Live's MAU growth of 58% YOY (ex India) is incredibly impressive and exceeds many of the leading social media companies today. Likee's 147% MAU growth and Hago's 20% MAU growth (ex India) are both also quite impressive. As a reminder, MAU growth helps pave the way for future revenue growth.
While Bigo Live currently makes up most of Bigo's revenue, management's plan to monetize Likee is slowly taking shape. The number of users using live streaming, a key revenue generator, grew 90% QOQ. With over 100 million MAUs on the app even after removing Indian users, Likee can help JOYY to expand into pretty much any area, whether e-commerce, gaming, or potentially even dating. The possibilities are truly endless - Just look at what Facebook (NASDAQ:FB) has been able to do with its users.
If JOYY's transformation is successful, its valuation now looks incredibly low compared to peers. After backing out the $3.6 billion in cash for the deal and the ~$2.5 billion in net cash on the balance sheet at the end of Q3, JOYY's overseas business is trading at just $6 per MAU. In comparison, peers like Pinterest (NYSE:PINS) trade at close to $90 per MAU and mature social media companies like Facebook trade at hundreds of dollars per MAU.
In the past, you could argue that US peers deserve the premium due to better shareholder friendliness and a more monetizable userbase, but with its recent $0.31 per quarter dividend initiation, JOYY is becoming an increasingly shareholder-friendly company. In addition, many of the users Bigo is acquiring and much of its revenue are coming from developed countries like the US. The gap between US social media companies and JOYY is shrinking, and I believe the valuation gap will shrink as well over the long run.
The main risk for JOYY is that the Baidu deal may potentially not close as management has stated that it is dependent on several undisclosed conditions, but since this deal seems to be beneficial for both parties, I expect both parties to push for the deal to close. Management may also potentially squander JOYY's cash on unprofitable ventures, though I believe this is less likely due to high insider ownership and the previously prudent nature of management.
Overall, it's clear that, while the India app ban is a major negative for JOYY, JOYY's intrinsic value still far exceeds the current share price, especially with the recent initiatives to make the company more shareholder-friendly like the dividend or the potential Hong Kong listing. I expect the valuation gap between JOYY and other social media companies to shrink over time, giving strong returns to JOYY shareholders over the long run.
I didn't get most of what he said . They are robbing Peter to pay Paul I think after all the years they have been public I doubt it.
Exposed like Luckin Coffee by Carson Block and Muddy Waters. Read the 71 page report.
A company that is shorting YY creates a lawsuit that crashes the market value. Is this legal? I hope they don't profit from this, the SEC will eat Muddy Water's lunch.
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