YY Beats Revenue Expectations; Stock Drops as Jefferies Cuts Target Price

Shares in YY rose more than 2 percent in the evening after the earnings announcement; however, they fell more than 7 percent to $112.17 per ADS in early trading on Wednesday after Jefferies cut its target price to $150 per share from $164.

CapitalWatch Staff
    Jun 06, 2018 9:06 AM  PT
YY Beats Revenue Expectations; Stock Drops as Jefferies Cuts Target Price
author: CapitalWatch Staff   

YY Inc. (Nasdaq: YY), a live-streaming social media platform in China, announced late today that its revenue jumped 43 percent, beating expectations, as net income nearly doubled in the first quarter. 

Shares in YY, which ended Tuesday at $121 per American depositary share, rose more than 2 percent in after-hours trading following the earnings announcement. However, they fell more than 7 percent to $112.17 per ADS in early trading on Wednesday after Jefferies cut its target price to $150 per share from $164, according to Thomson Reuters Eikon.

The company, aided in part by large growth in Huya Inc., in which it holds a majority stake, said revenue for the first three months rose to $518 million from $361.4 million a year ago. Net income climbed in the period to $154.5 million from $86.1 million. 

After accounting for preferred dividend payments, YY reported that net income attributable to the company declined to $70.8 million, or $1.09 per fully diluted share, compared with income of $86.6 million, or $1.47 per share a year ago. 

"We are delighted to start 2018 with robust growth in the first quarter," David Xueling Li, chairman and acting chief executive officer of YY, said in a statement. "Our mobile live streaming monthly active users (MAU) increased by 23.9% year over year to 77.6 million, and our total live streaming paying users increased by 17.3% year over year to 6.9 million." 

For the second quarter of 2018, YY said it expected net revenue to be between $574 million and $590 million, representing a year-over-year increase of 38 to 41.8 percent. In addition, the company said it expected to have a fair value loss of about $367 million on derivative liabilities related to Huya's initial public offering last month. 

Separately, YY also announced today that it has backed Bigo Inc. with a $272 million investment in Bigo's series D fundraising, becoming the lead investor in the global video-based social platform. The company, an existing investor in Bigo, said it has also obtained a right to purchase additional shares of Bigo for a controlling 50.1 percent stake of the voting power. 

Singapore-based Bigo owns the live streaming platform Bigo Live, which is among the most popular in the world, excluding China. It also operates a short-form video editing and sharing platform called Like.

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The shares of YY fell more than 7 percent intraday Wednesday to $112.17 per share.

(Source: Thomson Reuters Eikon)

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