Technology Stocks

HUYA Inc – ADR (NYSE:HUYA) Puts Out the Q3 as Its 3rd Q

HUYA Inc – ADR (NYSE:HUYA), which was spun off from YY Inc. (YY) in an IPO this past May, was trading higher after reporting Q3 results late last night. This was HUYA’s third report as a public company.

Let’s get straight to the numbers. Q3 results, non-GAAP income per ADS rose to US$0.08 from a loss last year. Revenue jumped 118.1% year/year to US$185.9 mln. Live streaming revenue makes up the bulk of its revenue, and that increased 120.2% year/year to US$177.1 mln, primarily due to the increase in spending per paying user and the increase in the number of paying users on Huya’s platform. Advertising and other revenue increased by 92.9% to US$8.8 mln.

HUYA Inc – ADR (NYSE:HUYA) bills itself as company that, through its subsidiaries, operates game live streaming platforms in the People’s Republic of China.

Its platforms enable broadcasters and viewers to interact during live streaming. The company also provides advertising and online game-related services.

HUYA is a game live streaming platform in China that serves a large and active game live streaming community. The company has cooperated with e-sports event organizers, as well as major game developers and publishers, to foster an online space for gaming and e-sports players and their audiences. Live streaming of e-sports, now a mainstream entertainment option in China, has developed into one of the most popular content genres on its platform. HUYA has the largest and most active game live streaming community in terms of average MAUs and average daily time spent on mobile app per mobile active user. Its live streaming content covers more than 2,600 different games, including mobile, PC, and console games.

With game streaming strength providing a sturdy foundation, HUYA has also branched into broadcasting other entertainment genres, such as talent shows, anime, style tips presented by popular anchors, and outdoor activities, from fitness content to videos of street interactions.

As of December 31, 2017, its live streaming content covered approximately 2,600 games, including mobile, PC, and console games. The company was founded in 2014 and is based in Guangzhou, China. HUYA Inc. is a subsidiary of YY Inc.


Open Over the Middle

The stock has suffered a bit of late, with shares of HUYA taking a hit in recent action, down about -3% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -19%.

In terms of operating metrics, average mobile MAUs in Q3 reached 49.4 mln, up 28.2% year/year. Average MAUs reached 99.0 mln, up 14.6% year/year. Total number of paying users reached 4.2 mln, up 37.8% year/year. In particular, HUYA’s focus on mobile MAUs is paying off. Also, HUYA has decided focus aggressively on e-sports, and it’s going well as the company broadcasted a larger number of major tournaments and self-organized e-sports events. Also, HUYA achieved record high viewership driven by the popularity of e-sports.

It’s understandably difficult for US investors to be familiar with Chinese gaming platforms. All of them seem to have big growth numbers, so you have to treat them carefully. The stock has been on a pretty hefty downtrend since briefly trading above $50 in mid-June. It’s now in the $19 area, although it’s up around 5% today on the Q3 results. We view a lot of these Chinese gaming stocks as more on the speculative side and would be cautious about buying them if you’re a longer term investor. They can be quite volatile, and while e-sports is popular now, gaming trends in China can change pretty rapidly.

HUYA Inc – ADR (NYSE:HUYA) has a strong balance sheet, with cash levels far exceeding current liabilities ($832.4M against $136.4M).

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