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HUYA Stock: Profitable Livestream Gaming Platform Down Over 80%

HUYA stock is sitting right above its all-time low price of $6.08 a share. Keep reading to learn why it’s down and what to expect next.
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If you are keeping track of gaming stocks, you know the industry is in high demand. People are playing video games in record amounts. Not only that, but spending on video games increased by 35% in 2021. Despite the growth in popularity, HUYA stock is still down over 80% from its highs.

HUYA Inc. (NYSE: HUYA) is a Livestream gaming company based in China. The gaming company is quickly gaining momentum, with eSports blowing up in popularity.

Having said this, China is leading the +$1 billion eSports market, with the U.S gaining momentum. HUYA is the market leader with engaging live events attracting millions of viewers. As a result, the company is achieving impressive growth.

Yet, with the tech crackdowns and new regulations in China, HUYA stock is sitting right above its all-time low price of $6.08 a share. Keep reading to learn why HUYA stock is down and what to expect next.

What You Need to Know About HUYA Inc

For those of you familiar with the popular streaming app Twitch, HUYA is very similar. The company provides a platform for gamers to watch and interact with their favorite players.

On top of this, HUYA hosts several popular events, including:

  • Gaming events
  • Talent shows
  • Anime
  • Outdoor activities
  • And more.

Furthermore, the company provides online advertising and software development services with its technology. The diverse portfolio is allowing for steady top and bottom-line growth.

With this in mind, HUYA is the leading live streaming platform in China, with mobile MAUs reaching over 85 million in Q3. The growth is supported by higher demand for live streaming events and more awareness from promotions.

Not only does HUYA have a growing user base, but users are sticking with the platform with 70% retention. With the pandemic limiting live sporting events, eSports is attracting new crowds.

And lastly, the company is expanding its international reach with its Nimo TV. The overseas streaming platform gained over 28 million MAUs in the third quarter alone. Revenues from Nimo TV soared 200% this year, with eSports events attracting fans from S.E Asia, the Middle East and Latin American countries.

Why HUYA Stock Is Falling

If you are not keeping up with the markets right now, most sectors are under pressure, with the exception of energy stocks. In particular, tech stocks are leading the way after seeing their values skyrocket since the pandemic.

But there’s more to it with HUYA. In addition to the pressure on global markets, HUYA stock is subject to regulation in China. The China tech crackdown is causing added pressure on tech giants like Tencent (OTCMKTS: TCEHY) and Alibaba (NYSE: BABA).

In fact, regulators shot down the proposed HUYA and DouYu deal that would have further expanded the company’s leadership in live gaming.

Last fall, the country started cracking down after Alibaba founder Jack Ma’s Ant Group’s IPO was suspended. Since then, authorities are on an anti-monopoly spree. The added risk is deterring investors.

Furthermore, the Chinese government implemented new restrictions on video game use, a major roadblock for HUYA’s business. The new rules allow children to play video games only on public holidays and weekends from 8 pm to 9 pm.

The new regulation affects HUYA’s business as the company relies on viewership hours to attract sponsors. In the third quarter, live streaming revenue fell by 2.1% due to lower player spending.

Yet the company is overcoming these challenges with strong demand for advertising and licensing content. As the company continues expanding its global reach, it lessens the risk with China regulation.

HUYA Stock Analysis

With HUYA stock resting on all-time lows, it’s easy to slap an “oversold” tag on it and talk about the upside. But in this case, HUYA does have a unique opportunity on its hands.

Despite the new rules, HUYA is growing steadily. The company hosted 131 3rd party eSport tournaments in Q3, generating 590 million total views. And even more, HUYA hosted 58 self-made events, with total viewers reaching 142 million, 40% more than last year.

As a result, total revenue increased 6%, reaching $461 million. The growth shows so far the company is overcoming the new challenges with heavy demand for content.

At the same time, HUYA stock is down over 80% from its highs and isn’t showing any signs of life. After peaking at levels over $36 per share in February, shares of HUYA continue fading. With this in mind, the new laws and regulations are spooking investors. Therefore, companies in China have watched their businesses lose billions in value over the past year.

Having said this, HUYA is a solid business with a growing top line, low debt and a strong industry outlook. The company is currently sporting an EV/Revenue of 0.01. When you compare it to peers, HUYA stock is severely under its value.

Nonetheless, investing in Chinese tech stocks can seem daunting with many unknowns.

HUYA Stock Forecast: Can HUYA Overcome The Odds?

Even though HUYA stock is getting beat up with surprising new rules targeting the industry, it’s expanding its user base beyond China. The move is helping stabilize growth while attracting users from around the world.

ESports is one of the most highly anticipated industries with growing demand for live entertainment. In fact, global revenue for eSports is projected to reach 1.62 billion in 2024.

Despite the government’s best actions to limit gaming, China will still be one of the biggest markets. And with HUYA extending its reach beyond the country, look for continuing user growth.

In the long term, HUYA stock looks like a good undervalued bet with huge market potential. At the same time, we see what happens when investors lose trust. Stocks can lose a significant amount of value with new regulation.

And China is proving they cannot be trusted when it comes to public markets. As a result, companies listed in China continue losing value. For example, the Hang Seng Index is leading global markets to the downside, losing nearly 20% in the past year.

If you decide to invest in HUYA stock, just know the risks that come along with it. Shares are already down over 80% from highs leaving investors underwater.

The post HUYA Stock: Profitable Livestream Gaming Platform Down Over 80% appeared first on Investment U.

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Economics

Best Day For Discretionary Stocks Since COVID-Crash As Consumer Recession Bets Get Steamrolled

Best Day For Discretionary Stocks Since COVID-Crash As Consumer Recession Bets Get Steamrolled

A week ago, following dismal guidance by Walmart,…

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Best Day For Discretionary Stocks Since COVID-Crash As Consumer Recession Bets Get Steamrolled

A week ago, following dismal guidance by Walmart, Target indicated that it is seeing a shift in the consumer wallet away from the pandemic purchases and into reopening purchases - including apparel - and the pace of this shift caught some retailers off guard on inventory. WMT, COST, and TGT all saw their stocks fall sharply last week as investor concerns around a US consumer slowdown mounted and investors reconsidered just where, if anywhere, you can play "defense" in the current market.

But as Goldman's Chris Hussey writes today, this week, results from companies like DKS, Macy's, JWN, WSM, DLTR, and DG painted a decidedly different picture.

Deep discount retailers Dollar Tree - or rather Dollar 25 Tree - and Dollar General both posted strong results and DLTR raised top-line guidance.

Which isn't surprising: as we discussed in "Middle Class Is Shutting Down As Spending By The Rich Remains Robust" when consumers are trading down - as they are doing now due to Biden's runaway inflation - dollar stores see more business.

As a result, Dollar Tree surged as much as 20% on Thursday, the biggest intraday move since October 2020. Evercore ISI said Dollar Tree's move to a "$1.25 price point" last November from $1 “came in the nick of time" adding that "given the broad-based inflationary cost pressures, the 25% price increase drove material sales and margin upside for both the namesake division and the total company," wrote analyst Michael Montani who also said that while freight, transport, and labor headwinds are real, some of the pressure cited by Target last week was likely company specific.

The analyst concluded that the read-across from DG and DLTR is “favorable,” and it seems that the low-end consumer is “hanging in better than initially thought.” Or rather, the middle-class is getting crushed and it has no choice but to trade down to the cheapest retail outlets.

And with countless shorts having piled up and getting massively squeezed, the S&P 500 Consumer Discretionary Index today has risen as much as 5.6%, its best day since April 2020, as optimism on the health of the consumer returns following a string of better-than-expected earnings reports from retailers.

Top performers in the S5COND index include Dollar Tree, Dollar General, Norwegian Cruise, Caesars Entertainment and Carnival; the Discretionary Index is on pace for its best week since March 18, when the group climbed 9.3%; the index sank 7.4% as Walmart and Target reports spooked investors. The index is still down almost 30% YTD.

"Retail earnings are bullish.... with four blow-outs,” said Vital Knowledge’s Adam Crisafulli, referring to quarterly reports from Williams-Sonoma, Macy’s, Dollar General, and Dollar Tree.  “The overall retail industry is experiencing stark changes and the market is incorrectly conflating these shifts with underlying demand weakness when the actual health of the consumer is much better than it seems,” Crisafulli says, although there are many - this website included - who wholeheartedly disagree with his optimistic view of the US consumer.

Remarkably, thanks to today’s rally, even Burlington Stores, which sank as much as 12% in premarket on disappointing results, is trading up as much as 11% and some say, the rally helped reverse the earlier tumble in NVDA shares.

The discretionary group is also getting a boost from airline operators Southwest and JetBlue, helping travel-related names, while on the economic front, better-than-expected personal consumption (for the revised Q1 GDP print). and jobless claims may be adding to the bullishness according to Bloomberg.

Tyler Durden Thu, 05/26/2022 - 15:00

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Restaurants’ Share Of Food-Dollar Grows To Record 54.9% In April

Restaurants’ Share Of Food-Dollar Grows To Record 54.9% In April

By Nation’s Restaurant News

Restaurants continued to increase their share…

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Restaurants' Share Of Food-Dollar Grows To Record 54.9% In April

By Nation's Restaurant News

Restaurants continued to increase their share of spending in April, reaching 54.9% of the food dollar, according to U.S. Census data released Tuesday. That was a 260-basis-point increase from April last year, when the share was 52.3%, said analyst Mark Kalinowski, president and CEO of New Jersey-based Kalinowski Equity Research LLC.

“Even more impressively, as best as we can tell, this 54.9% market share figure for April 2022 is an all-time monthly high for the U.S. restaurant industry,” Kalinowski said in a note released Tuesday about the April U.S. Census data.

Kalinowski said restaurants, especially multi-unit public chains, were increasing prices but at a more modest rate than retail groceries.

“The key takeaway from this is you have a lot of menu prices going up in the restaurant industry,” he said in an interview.

“And, of course, the fear anytime you're raising your menu prices is that customers will trade down, but that hasn’t happened.”

Kalinowski noted that while restaurant brands were increasing prices, the rate of hikes was less than in grocery prices.

“If you need to eat — and I haven't yet met the person who didn't need to eat — you have got to buy the food from some place unless you're growing it yourself or you have a neighbor who grows it,” he said. “The fact is the restaurant industry offers a lot of convenience. It offers experiences that the grocery stores can't match.

“It is so firmly a part of the American fabric now that Americans don't necessarily want to cut their restaurant spending,” Kalinowski said.

The analyst also noted that larger restaurant brands were being very calculated in how they were raising prices to offset their increased commodity and labor costs.

For example, Kalinowski noted, “McDonald's looks at the food at home inflation and takes that into account with their menu pricing. I would imagine there's definitely a lot of other chains out there that have gotten a little more sophisticated with how they take their menu pricing.”

Those judicious price increases are easier for large, multi-unit chains to institute than for independent restaurants, he noted.

“Independents lack the scale advantages that large chains have,” he said, “so part of the challenge for independence is, in the time of just big commodity cost inflation, how do you battle that. That's not saying it's easy for the large chains — it's hard on everybody just about.”

Over the past two years, he added, the industry has seen the largest shift toward big restaurant brands who are taking increased shares of what is a larger pie.

Census data for April calculated U.S. food services and drinking places posted $83.741 billion in sales, as compared to the April 2022 figure for U.S. grocery stores of $68.906 billion.

Kalinowski said it was intriguing that combined foodservice and drinking place sales with grocery sales had increased significantly from pre-pandemic levels.

“There seems to be meaningfully more spending on food/beverages than there was pre-pandemic,” he said. “The April 2022 combined number of $152.6 billion is 26.4% larger than the April 2019 combined number of $120.7 billion.”

This past April marked the 12th consecutive month for which that number was up more than 10% over the corresponding pre-pandemic monthly number, Kalinowski noted.

“We continue to look for restaurants’ market share in full-year 2022 to be at least one full percentage point higher than the full-year 2021 figure of [positive] 52.7%,” he said.

“All in all, this is good news for restaurant stocks — which tend to be comprised of the very largest restaurant concepts in most cases,” Kalinowski said in his note. “Large concepts have fared better than smaller chains and independents during the pandemic, creating the largest opportunity in decades for market-share gains within the restaurant industry favoring large chains.”

Tyler Durden Thu, 05/26/2022 - 13:40

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Economics

‘Insiders’ Are Buying This Dip

‘Insiders’ Are Buying This Dip

The Nasdaq is in the middle of its worst drawdown since the Lehman crisis and the Dow just suffered its longest…

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'Insiders' Are Buying This Dip

The Nasdaq is in the middle of its worst drawdown since the Lehman crisis and the Dow just suffered its longest losing streak in 99 years.

As that is happening, faith in The Fed is crumbling as Powell faces the central bankers' nemesis of stagflation... and all in an election year (threatening the confidence in The Fed's independence should it falter from its path of uber-hawkishness).

According to the latest BofA Fund Manager Survey, the grim 'market' has sent investors reeling with those equity funds tracked by EPFR Global suffering six straight weeks of outflows (the longest stretch of withdrawals since 2019), and cash levels among investors soaring to their highest level since September 2001.

Additionally, the BofA survey also showed that technology stocks are in the 'biggest short' since 2006.

The 'proverbial' dip-buyer appears to have abandoned hope as the strike on any Fed Put (at which Powell will fold like a cheap lawn chair over the pain) gets marked lower and lower.

But...

There is one group apparently, that is willing to dip a toe in the capital market deadpool - corporate insiders.

As Bloomberg reports, according to data compiled by the Washington Service, more than 1,100 corporate executives and officers have snapped up shares of their own firms in May, poised to exceed the number of sellers for the first month since March 2020 marked the pandemic trough two years ago.

The ratio has surged to 1.04 this month from 0.43 in April.

Notably, the insider buy-sell ratio also jumped in August 2015 and late 2018, with the former preceding a market bottom and the latter coinciding with one.

“It is a function of investors functioning at the '30,000 foot level' or 'macro' whereas insiders are functioning at the 'boots on the ground', company-fundamentals level,” said Craig Callahan, chief executive officer at Icon Advisers Inc. and author of 'Unloved Bull Markets'.

“We believe the company-fundamentals view is usually correct.”

Nicholas Colas, co-founder of DataTrek Research, is not as confident:

“All we know for sure is that the valuation of any stock or the entire market hinges on whether investor confidence in future cash flows is rising or falling. At present, confidence is falling,” he wrote in a recent note.

“This is not because stocks expect a recession. Rather, it is because the range of possible S&P 500 earnings power runs in a wide channel and can become wider still.”

Starbucks' Interim Chief Executive Officer Howard Schultz and Intel CEO Patrick Gelsinger are among corporate insiders who scooped up their own stock amid the latest market rout that took the S&P 500 to the brink of a bear market.

With their share prices plunging, we can't help but wonder if this 'buying' is mere virtue-signaling so that the board won't fire them for their absymal loss of market cap? 

Tyler Durden Thu, 05/26/2022 - 13:20

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