- JOYY (NASDAQ:YY) - initially higher yesterday evening after its Q3 earnings - has slipped 18.4% after Muddy Waters has opened up a short report, alleging "massive fraud" at the company and its high-flying Bigo Live unit.
- "While trawling the sewers of the world’s capital markets over the past 10 years, irony has never been in short supply," the firm says. "And yet, nothing could prepare us for the surreality of Baidu (NASDAQ:BIDU) announcing its intention to buy YY Live from JOYY, which happened just as we were preparing to reveal that our year-long investigation shows YY Live is about 90% fraudulent."
- YY Live is an "ecosystem of mirages," the firm says, with supposedly high-earning performers actually taking home a fraction of reported pay, and "purportedly independent channel owners" actually largely controlled by YY to facilitate sham transactions.
- Meanwhile, JOYY has pointed actively to its growth outside of China, but Muddy Waters says "YY's international live-streaming business, Bigo, seems barely more real."