JOYY Inc: Social Media Stock Looks Bullish After Q4 Earnings Beat

JOYY Stock Undervalued During Coronavirus Outbreak

JOYY Inc (NASDAQ:YY) is not a tech stock you often hear investors discussing around the water cooler. But in light of the coronavirus (COVID-19) and self-isolation, this social media and live streaming stock is definitely one that should be on your investing radar.

The company recently reported strong, better-than-expected fourth-quarter results and its outlook for the first quarter looks encouraging.

YY Stock Overview

Guangzhou, China-based JOYY is a global social media company that helps its customers connect with each other in real time through online live media. It also provides a wide range of entertainment content and activities. (Source: “Investor Presentation August 2019,” JOYY Inc, last accessed March 20, 2020.)

According to the company, its “YY Live” is the  leading entertainment live streaming social media platform in China.

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JOYY also owns a majority stake in Huya Inc (NYSE:HUYA), the leading game streaming platform in China. “Hago” is the company’s mobile video game social network, and “YY dating” is pretty self-explanatory.

In March 2019, JOYY completed the acquisition of Bigo, a Singapore-based tech company that owns “Bigo Live,” a live streaming platform that operates outside China. It is also the home of “Likee” (a short-form video social media platform), “imo” (a video communication app), and other social media apps.

JOYY Inc Key Statistics

  • Social media platform is available in more than 150 countries
  • More than 485 million monthly active users (MAU)
  • Bigo Live: No. 1 live streaming community in China
  • imo: No. 1 video communication instant messaging platform in the world
  • Likee: No. 2 global short-form video platform in the world
JOYY Stock Information
Market Cap $4.0 Billion
52-Week Change -40.3%
52-Week High $88.85
52-Week Low $41.33
Shares Outstanding 81.0 Million
Float 56.3 Million
50-Day Moving Average $57.11
200-Day Moving Average $59.00

(Source: “JOYY Inc. (YY),” Yahoo! Finance, last accessed March 20, 2020.)

Q4 Revenue Up 64%, Net Income Beats Estimates

On March 16, JOYY reported its financial results for the fourth quarter and fiscal year ended December 31, 2019. Fourth-quarter net revenue was up 64% year-over-year, at $1.1 billion. This beat the high end of the company’s previous guidance range. (Source: “JOYY Reports Fourth Quarter and Full Year 2019 Unaudited Financial Results,” JOYY Inc, March 16, 2020.)

The company’s fourth-quarter net income slipped 75% year-over-year to $25.0 million. In the same period, JOYY’s adjusted net income went down 29% year-over-year, at $86.0 million.

Those declines can largely be attributed to the company’s acquisition and consolidation of Bigo.

Fourth-Quarter Highlights

  • Global average mobile MAU hit 485.2 million; 78.8% were from outside China
  • Likee’s average mobile MAU increased 208% to 115.3 million
  • Global live streaming services’ average mobile MAU increased 21.5% to 158.9 million
  • imo’s average mobile MAU were 211.0 million
  • YY’s total number of paying users increased 9.8% to 4.5 million
  • Huya’s total number of paying users increased 5.9% to 5.1 million

David Xueling Li, Chairman and CEO, commented, “We concluded 2019 with robust operating and financial performances in the fourth quarter, further demonstrating the success of our domestic and international businesses.” (Source: Ibid.)

In fiscal 2019, JOYY Inc’s net revenues increased 62.2% year-over-year to $3.7 billion. Net income for 2019 increased 56% to $494.9 million. Adjusted net income decreased 31% to $323.6 million.

As of December 31, 2019, JOYY had cash and cash equivalents, restricted cash and cash equivalents, short-term deposits, restricted short-term deposits and short-term investments of $3.9 billion.

JOYY Inc Outlook

For the first quarter of fiscal 2020, JOYY management expects revenue to climb between 41% and 43% on an annual basis. This large increase factors in the potential impact of the coronavirus pandemic.

“[W]e are confident that our global footprint, diversified products matrix, and abundant cash reserve have positioned us to meet the challenges and seize the opportunities ahead,” said Chief Financial Officer Bing Jin. (Source: Ibid.)

Analyst Take

JOYY Inc is a social media giant that continues to do well during the coronavirus pandemic. As mentioned earlier, the company’s fourth-quarter results exceeded expectations and its robust outlook for the first quarter shows that it can thrive during the virus outbreak.

Therefore, despite the current global headwinds, JOYY stock continues to have excellent short- and long-term growth potential.