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Why Huya, Inc. Stock Plunged Today

By Steve Symington – Aug 14, 2018 at 4:42PM

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The Chinese game-streaming leader's outlook left investors underwhelmed.

What happened

Shares of Huya Inc. (HUYA -2.31%) fell 16% on Tuesday after the Chinese game live-streaming specialist announced solid quarterly results but followed with light forward guidance.

On the former, Huya's quarterly revenue climbed 125.1% year over year to RMB 1.0383 billion (or roughly $156.9 million), which translated to adjusted net income of RMB 105.4 million ($15.9 million), or $0.06 per diluted share. Analysts, on average, were anticipating roughly the same earnings on revenue of $145.7 million.

Yellow line with arrow indicating losses, gray background with stock market data


So what

Within Huya's top line, live-streaming revenue soared 124.5% to $149.9 million, while advertising and other revenue rose 138.1% to $7 million.

CEO Rongjie Dong called it a "constructive" quarter, adding, " With our commitment to enriching content offerings and advancing key technological capabilities, we are confident that we are well positioned to capture new monetization opportunities in the long run."

Now what

For the third quarter of 2018, Huya told investors to expect revenue of RMB 1.19 billion ($172.9 million) to RMB 1.22 billion ($177.2 million), good for year-over-year growth of 103.9% to 109.1%. However, the midpoint of that range is well below consensus estimates for Q3 revenue of $178.6 million.

That's not to say this was a bad quarter. But with shares having more than doubled since shortly after Huya's IPO in May, its top-line guidance shortfall relative to expectations was more than enough to spur investors to take some profits off the table today.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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