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Why YY, Inc. Stock Popped Today

By Steve Symington – Updated Nov 14, 2018 at 5:01PM

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The Chinese live-streaming specialist delivered solid third-quarter results. Here's what investors need to know.

What happened

Shares of YY Inc. (YY -3.94%) jumped as much as 11.8% early Wednesday, then settled to close up 8.8% after the Chinese live-streaming social media platform announced strong third-quarter 2018 results. 

More specifically, YY's quarterly revenue climbed 32.6% year over year to 2.6745 billion yuan ($597 million). That translated to 19.7% growth in adjusted (non-GAAP) net income to $114.6 million, and an 11.1% increase in adjusted net income per share to $1.76. Most analysts would have settled for earnings of $1.67 per share on revenue of $590 million.

Man in suit drawing arrow chart indicating gains


So what

YY's top-line growth was driven by a 32.6% increase in live-streaming revenue, helped by 20.7% growth in mobile live streaming monthly active users and a 26.3% increase in total live streaming paying users. 

Chairman and acting CEO David Xueling Li added that both YY Live and Huya have enjoyed "continuous market expansion," adding:

For YY Live, we continued to leverage our industry-leading AI technology to increase the accuracy and effectiveness of our content recommendation process. Meanwhile, we have initiated a strategic cooperation with Xiaomi to exclusively operate certain entertainment live streaming services on Xiaomi Live. The cooperation will provide Xiaomi's users with a better experience in entertainment live streaming services and enable both YY and Xiaomi to explore additional monetization opportunities. Looking ahead, we will remain focused on cementing YY's leadership in the live streaming industry through product innovation and technology advancements.

Now what

For the fourth quarter, YY sees revenue arriving between 4.39 billion yuan and 4.54 billion yuan, good for year-over-year growth of 21.1% to 25.2%. By contrast, analysts' consensus estimates predicted much more modest 12.8% growth.

In the end, combined with YY's straightforward third-quarter beat, that outlook gave investors more than enough reason to bid up YY shares in response 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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