Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why YY, Inc. Stock Plunged 18% in August

By Steve Symington - Sep 12, 2018 at 7:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Chinese live-streaming leader delivered solid quarterly results, but its outlook left investors wanting more.

What happened

Shares of YY Inc. ( YY 4.81% ) fell 18% in August, according to data from S&P Global Market Intelligence, after the Chinese live-streaming platform announced strong quarterly results but followed with disappointing forward guidance.

The stock plunged more than 13% on Aug. 13 alone, the first trading day after it told investors revenue had climbed 44.6% year over year to 3.773 billion yuan, or $570.2 million, translating to 34.3% growth in adjusted net income per American depositary share to 13.46 yuan, or $2.03. Analysts, on average, were looking for earnings of only $1.76 per share on revenue of $536.2 million.

Man in suit watching a red arrow crash through the floor

IMAGE SOURCE: GETTY IMAGES.

So what

YY Chairman and CEO David Xueling called it a "strong performance," noting that the number of mobile live-streaming paying users climbed more than 21% to 6.9 million.

"During the quarter, we achieved solid progress in traffic acquisition, product advancement, and technology enhancement," Xueling added. "Looking forward, we remain committed to continuous product innovation and technology advancement to uphold YY's market leadership in the live streaming industry."

Now what

For the current fiscal third quarter, however, YY sees revenue in the range of $610.4 million to $630.8 million, representing growth of 25.8% to 30% year over year. However, that's a notable deceleration from its Q2 growth rate, and most analysts were modeling revenue near the high end of that range.

Still, YY has made a habit of under-promising and over-delivering of late, so I won't be the least bit surprised if it manages to outperform when all is said and done in Q3. But given macroeconomic concerns in China and with the stock up nearly 19% in the year leading up to its report last month, it was hardly surprising to see YY pull back.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

YY Stock Quote
YY
YY
$49.87 (4.81%) $2.29

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
652%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/08/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.