What led to JOYY Inc (NASDAQ: YY) stock fall

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JOYY Inc (NASDAQ: YY) stock lost over 7.2% on May 21st, 2020 pre market session (as of 8:02 am GMT-4; Source: Google finance). Gross margin had contracted to 30.8% in the first quarter of 2020, from 33.9% in the corresponding period of 2019 as Huya and Bigo segments had lower gross margins but contributed significantly greater portions of net revenues in the first quarter of 2020, compared to the corresponding period of 2019. The company’s Non-GAAP operating income has decreased to RMB613.2 million (US$86.6 million) in the first quarter of 2020, from RMB717.3 million in the corresponding period of 2019.

The company in the first quarter of FY 20 has reported 49% rise in the net revenues to RMB7,149.4 million (US$1,009.7 million) in the first quarter of 2020 from RMB4,780.6 million in the corresponding period of 2019, mainly due to an increase in live streaming revenues and the contribution from the consolidation of Bigo. At the end of March, 2020, the Company had cash and cash equivalents, restricted cash and cash equivalents, short-term deposits, restricted short-term deposits and short-term investments were of RMB26,567.1 million (US$3,752.0 million). For the first quarter of 2020, the company generated net cash from operating activities of RMB373.7 million (US$52.8 million). Overall, the company has reported Non-GAAP net income attributable to controlling interest of JOYY Inc. of RMB428.9 million (US$60.6 million) in the first quarter of 2020, compared to RMB653.5 million in the corresponding period of 2019. Non-GAAP net margin had fallen to 6.0% in the first quarter of 2020, compared to 13.7% in the corresponding period of 2019.

Moreover, Live streaming revenues grew by 50.6% to RMB6,756.3 million (US$954.2 million) in the first quarter of 2020 from RMB4,485.0 million in the corresponding period of 2019, mainly due to the continued live streaming revenues growth in both Huya segment and Bigo segment. Other revenues rose by 33.0% to RMB393.2 million (US$55.5 million) in the first quarter of 2020 from RMB295.6 million in the corresponding period of 2019, mainly due to the increase in advertising revenues from Bigo. The company’s gross profit rose by 36.0% to RMB2,203.6 million (US$311.2 million) in the first quarter of 2020 from RMB1,620.3 million in the corresponding period of 2019.

For the second quarter of 2020, the Company expects net revenues to be in the range of RMB5.00 billion and RMB5.15 billion, representing a year-over-year growth of 16.7% to 20.2%, excluding the revenue contribution from Huya in the same period of last year.

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