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- Chinese online social platform YY Inc. (NASDAQ:YY) reported strong 2Q14 results on August 6.
- YY's top-line outperformance in the quarter was primarily driven by its online music and entertainment business.
- In addition to strong revenue growth, YY achieved significant margin expansion in the quarter thanks to strong operating leverage.
- Looking ahead, management noted online game broadcasting and online dating as two new growth drivers.
- I estimate a fair value of $107.45 per share for YY's stock, and believe investors should buy YY's stock at current levels.
- YY is continuing its high growth path, and the growth expectations should continue to improve going forward.
- The technology/internet sector sell-off and a bad reaction to a good earnings report created a strong buying opportunity.
- The share repurchase program adds to the long thesis.
- Content regulation worries are overdone.
- This article provides an overview of how 100.com’s classes work, discusses several advantages of online education, and suggests how the company can monetize 100.com, going forward.
- Advantages of YY's online education include: elimination of geographical barriers, promoting online discussions, and maintaining an organized curriculum.
- Once YY establishes a strong reputation for its educational services, it will have greater bargaining power, and the company will have the ability to increase the price of each course.
Is YY About To Disrupt The Online Education Market In China?
- YY’s recent announcement that it will invest RMB1 billion in online education could have a profound impact on online education in China.
- This poses a serious threat to New Oriental Education and other companies that intend to participate in the online education segment.
- YY might not like New Oriental’s potential response.
- YY reported earnings and revenue that easily beat analyst estimates.
- Online music/entertainment continues to be the strongest growth contributor.
- Gross margin expanded 260 basis points over Q4 2012, but is expected to be flat in 2014 on increased investments.
- YY is undervalued compared to its high growth peers and has 50% upside based on the previously established price target of $126.
Fri, Sep. 19, 12:44 PM
- Whether it's a case of selling on the news, freeing up capital to buy Alibaba shares, or a mixture of the two, a slew of Chinese Internet stocks are selling off as Alibaba (though off its highs) registers a 30%+ post-IPO gain.
- Baidu (BIDU -2.2%) and JD.com (JD -4.5%), both of which rallied yesterday, are among the decliners. Others: QIHU -2.7%. SFUN -3%. EJ -2.7%. YY -2.1%. WB -2.3%. WUBA -6.3%. MOBI -6.4%. CMGE -6.5%.
Mon, Sep. 15, 1:21 PM
- Maybe looking to raise cash with which to buy Alibaba (Pending:BABA) this week, investors are dumping a wide swath of other Chinese internet names.
- Qihoo (QIHU -2.6%), Sohu.com (SOHU -5.3%), Baidu (BIDU -3.8%), Sina (SINA -4.9%), Renren (RENN -4%), Weibo (WB -11.3%), YY (YY -7.3%).
- Previously: Alibaba to boost IPO size
Wed, Aug. 6, 5:17 PM
- YY expects Q3 revenue of RMB925M-RMB935M ($150.2M-$151.8M), well above a $132.6M consensus.
- Q2 online music/entertainment revenue (61% of total) +202.7% Y/Y to $83.2M. Paid users +77.6% to 1.13M, ARPU +20% Q/Q and +70% Y/Y to RMB458.
- Online game revenue was $26.5M, +9.5% Y/Y but -9.1% Q/Q. Paid users fell by 23K Q/Q to 438K; ARPU rose 10.1% Y/Y to RMB381.
- Other Internet value-added service revenue +168.6% Y/Y to $18.9M. Member subscription fees +54%, live game broadcasting +243%, online dating +299%. Online ad revenue -4.6% to $6.5M.
- Gross margin fell to 49.5% from 52.4% in Q1 and 53.3% a year ago due to a mix shift towards online music/entertainment revenue (comes with content and revenue-sharing costs). Opex rose 30.7% Y/Y to $28.9M, well below revenue growth of 105.6%.
- YY -1.1% AH. Q2 results, PR.
Wed, Aug. 6, 4:05 PM
Tue, May. 6, 3:27 PM
- Twitter (TWTR -16.9%) opened below $36 on lockup expiration day and has steadily moved lower since; today's volume (110M shares) is already over 8x the company's daily average.
- A lack of a secondary offering to alleviate selling pressure might be contributing to Twitter's woes: On the Q1 CC, CFO Mike Gupta argued commitments from major holders not to sell (for the time being) eliminated the need for a secondary.
- After factoring options/RSUs, shares still go for ~10x 2015E sales exc. cash.
- The microblogging leader is headlining a fresh selloff in tech momentum plays. Yelp (YELP -12.7%) is also a noteworthy decliner - shares are now down 10% from where they traded prior to Yelp's April 30 Q1 beat.
- Pandora (P -8.4%) is down sharply after posting April metrics that included a slight M/M drop in listener hours, and YY (YY -7.9%) is selling off in spite of a Q1 beat and strong Q2 guidance.
- Morgan Stanley is defending YY: The firm highlights YY's mobile music growth - revenue +180% Q/Q and now 8% of total music revenue - and considers worries about a government crackdown on illicit content overblown. Deutsche, meanwhile, recently called YY's 100.com online education platform "“a potentially disruptive force in standardized test-prep market."
- Earlier: Twitter -4.9% premarket as lockup expires
Mon, May. 5, 4:43 PM
- YY expects Q2 revenue of RMB745M-RMB755M ($119.2M-$120.8M), above a $113.6M consensus and good for 82%-85% Y/Y growth.
- Online music/entertainment revenue, now 57% of total revenue, rose 11% Q/Q and 228% Y/Y to $61.6M. Paid users rose by 104K Q/Q to 1.006M, and ARPU by RMB8 to RMB381.
- Online game revenue rose 8% Q/Q and 36% Y/Y to $29M. ARPU rose by RMB15 Q/Q to RMB391, and paid users by 28K to 461K after falling by 10K in Q4.
- Online ads plunged 46% Q/Q and 24% Y/Y to $3.9M. All other revenue (membership fees, live game broadcasting) rose 10% Q/Q and 134% Y/Y to $12.7M.
- Gross margin was 52.4%, +90 bps Q/Q but -130 bps Y/Y. Opex rose 38% Y/Y to $23.4M (trailed rev. growth of 112%).
- Q1 results, PR
Mon, May. 5, 4:04 PM
Sun, May. 4, 5:35 PM
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Thu, Apr. 24, 4:50 PM
- Baidu (BIDU) expects Q2 revenue of RMB11.82B-RMB-12.11B ($1.901B-$1.948B), above a consensus of RMB11.55B.
- Revenue growth accelerated to 59.1% in Q1 from 50.4% in Q4. Online ad customers fell 1.1% Q/Q to 446K after falling 2.8% in Q4, but revenue per ad customer remained steady Q/Q and rose 44.1% Y/Y to RMB20.9K ($3,362).
- As promised, Baidu continues to invest aggressively: SG&A spend soared 136.9% Y/Y to $323.2M, thanks in large to mobile promotional efforts. R&D spend rose 57.5% to $205.4M.
- Traffic acquisition costs rose to 12.4% of revenue from 12.3% in Q4 and 10.2% a year ago. Content costs (fueled by online video licensing) rose to 4.1% of revenue from 3.8% in Q4 and 1.6% a year ago.
- Up in sympathy: SINA +1.6%. SOHU +1%. QIHU +2.6%. YY +1.1%. WB +1.5%. YOKU +1.7%.
- Q1 results, PR
Tue, Apr. 15, 4:55 PM| 8 Comments
Thu, Apr. 10, 4:01 PM
- Following a two-day rebound, high-beta tech stocks are seeing monumental losses once again. The Nasdaq is closing with its biggest one-day decline since 2011 (eclipsing last week's 110-point drop).
- Security hardware/software providers were hard-hit following Imperva's (IMPV -43.8%) big warning: FEYE -11.6%. PANW -6.4%. PFPT -9.8%. FFIV -4.7%. KEYW -6.5%. FTNT -6.9%. QLYS -10.4%.
- Other high-beta enterprise names didn't fare much better: DATA -10%. SPLK -10.3%. WDAY -9.3%. VRNS -8%. EOPN -7.9%. FIO -7.6%. BLOX -9.7%.
- Major Internet decliners: P -11%. YELP -10.6%. ZNGA -6.6%. YY -7.3%. QIHU -9.3%. SINA -6.6%.
- Solar: TSL -10.4%. CSIQ -10.4%. JKS -7.9%. SPWR -7.4%. JASO -6.8%. CSUN -8.2%.
- 3D printing: DDD -10.6%. VJET -13.3%. ONVO -8.1%. XONE -7.7%. SSYS -6.7%.
Tue, Apr. 8, 4:00 PM
- Smart bargain hunting or catching a falling knife? After being bludgeoned almost ceaselessly over the last couple of weeks, many high-beta tech stocks are closing the day with sizable gains.
- The rebound comes on a day when hedge fund Coatue Management announced plans to return over $2B to investors following a 9% March decline caused by tech stock losses. It also comes as several tech giants, including Apple, Microsoft, H-P, and IBM, finish the day near breakeven, or with modest losses.
- Leading U.S. Internet gainers: LNKD +6.2%. P +6%. ZU +5%. SALE +7.2%. SSTK +6%. AOL +4.6%.
- Chinese Internet gainers: EJ +9.1%. WBAI +8.9%. QIHU +7.9%. ATHM +8.1%. YY +6.8%. SFUN +8.7%. GOMO +9.8%. Ctrip and Qunar were among the sector's biggest gainers following M&A rumors.
- Others: FSLR +7%. NMBL +6.2%. NPTN +5.9%. PANW +5.5%. EGHT +5.4%. RFMD +4.9%. QIWI +4.9%. CRUS +4.3%. RALY +5.5%.
Mon, Mar. 17, 4:31 PM
- YY is the latest in a string of Chinese tech companies to take advantage of a soaring stock price by issuing convertible debt. Underwriters will have a $60M overallotment option, and holders will gain the right to require YY to buy back the notes on April 1, 2017. (PR)
- YY ended 2013 with $357.2M in cash and short-term deposits, and no debt.
Mon, Mar. 10, 3:57 PM
- Chinese Internet and solar names, many of them among the standouts of the 2013/2014 tech rally, are heading into the close with steep losses after the Chinese government reported exports fell 18.1% Y/Y in February (much worse than expected).
- Internet decliners: WUBA -10.7%. YOKU -7.3%. ATHM -7.2%. QUNR -6.4%. NQ -6%. RENN -5.2%. CTRP -5.2%. YY -4.4%. WBAI -4.4%. KONG -5.5%.
- Solar decliners: JKS -6.3%. YGE -5.8%. TSL -6.7%. CSUN -4.9%. CSIQ -4.5%. DQ -4.2%. HSOL -4.5%.
- Solar ETFs: KWT, TAN
Tue, Mar. 4, 4:25 PM
- YY expects Q1 revenue of RB625M-RMB635M ($101.8M-$103.4M), well above a $91.7M consensus.
- Q4 results blew away estimates in large part due to a 49% Q/Q and 217% Y/Y increase in online music/entertainment revenue to $55.6M (now 55% of total revenue). Paid users +17% Q/Q to 902K, ARPU +26% to RMB373.
- Online game revenue +6% Q/Q and +66% Y/Y to $26.9M. Paid users fell by 10K Q/Q to 433K, but ARPU rose 8% to RMB376. Games operated by YY rose by 15 to 126.
- Online ads -3% Q/Q and +29% Y/Y to $7.2M. Other revenue (membership fees, live game broadcasting) +21% Q/Q and +141% Y/Y to $11.5M.
- Gross margin rose 250 bps Q/Q and 360 bps Y/Y to 51.5%. Opex rose 37% Y/Y to $21.2M.
- Shares rose 14.9% in regular trading. After accounting for AH gains, they're up nearly 9x from a Nov. '12 IPO price of $10.50.
- Q4 results, PR
Tue, Mar. 4, 4:03 PM
YY vs. ETF Alternatives
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