Cheetah Surges 43% on Cash Dividend and Selling Remaining Stock in Bytedance

The mobile internet company hit a 12 week high.
Anthony RussoMay 20,2020,21:45

Shares of Cheetah Mobile Inc. skyrocketed nearly 43% by midday Wednesday on the news of it approving a cash dividend and selling its remaining stake in Bytedance Ltd.

The Beijing-based mobile internet company said in a statement today that its cash dividend of $1.44 per American Depositary Share at an aggregate amount of $200 million will be paid on July 9 to shareholders

As for its sale in Bytedance, Cheetah expects it to result in a disposal gain investment of roughly $66 million in the second quarter. The deal will also add around $130 million in cash inflow to Cheetah’s balance sheet. As of December, the company reported cash and cash equivalents, restricted cash, and short-term investments of $338.2 million. 

 “Cheetah Mobile has continued to return to our shareholders. In September 2018, its board of directors had approved a share repurchase program of up to US$100 million of our outstanding ADSs for a period not to exceed 12 months,” Cheetah said in a statement today.

It continued, “The Company funded repurchases made under this program from its available cash balance. In 2019, the Company had repurchased approximately 4.5 million ADSs for approximately US$32 million under this program. The Company cancelled all the repurchased Cheetah ADSs”. 

The announcement helped Cheetah hit a 12 week high of $3.28 per share today. After today’s gain, Cheetah will look to build off it as it’s been a challenging last couple of months for the company. Today’s high dates back to February when Cheetah had its roughly 45 apps banned from the Google Play Store. 

Also, Cheetah is coming off a weak fourth quarter, reporting that revenues declined 56% year-over-year to $87.9 million on a gross profit of $61.7 million. The company has noted that its plummeting revenues have been a result of the deconsolidation of the live streaming platform LiveMe. Cheetah is expecting to generate revenues in the range of $70 million and $78 million in the first quarter. 

Even with today’s news, uncertainties around Covid-19 and how the company plans on improving its revenue makes Cheetah a tough buy for investors going forward.