Tuya: Capital Allocation Approach Draws Attention

Nov. 29, 2023 11:25 AM ETTuya Inc. (TUYA) StockTUYA
The Value Pendulum
Investing Group Leader

Summary

  • TUYA's recent Q3 2023 results bring the company's capital allocation strategy into the spotlight.
  • Tuya's third quarter non-GAAP adjusted earnings beat expectations, but the company would have been loss-making without the interest income derived from its cash.
  • The stock's valuations are undemanding, so it might have been better for TUYA to allocate capital to share buybacks rather than retain a substantial amount of cash to earn interest.
  • I have decided to maintain my Hold rating for Tuya stock, considering both positives and negatives associated with its current capital allocation approach.
  • Looking for more investing ideas like this one? Get them exclusively at Asia Value & Moat Stocks. Learn More »

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Ross Tomei

Elevator Pitch

My rating for Tuya Inc. (NYSE:TUYA) [2391:HK] is a Hold. Earlier, I touched on TUYA's performance for the second quarter of this year and assessed the company's short term financial outlook in my

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This article was written by

The Value Pendulum
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The Value Pendulum is an Asian equity market specialist with over a decade of experience on both the buy and sell sides.

He is the author of the investing group Asia Value & Moat Stocks, providing ideas for value investors seeking investment opportunities listed in Asia, with a particular focus on the Hong Kong market. He hunts for deep value balance sheet bargains and wide moat stocks and provides a range of watch lists with monthly updates within his investing group.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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