Not afraid to short in muddy water

 Not afraid to short in muddy water

Since muddy water, a short maker, announced the era of short bets on Wednesday (November 18), its share price has fallen nearly 15% from its new high of nearly two and a half years. On Monday (23rd), U.S. stocks opened 1.4% lower in the morning of the gathering time, and then rose an hour later, finally rising 3.85%.

Since the announcement of the short selling report on November 18, the share price of happy gathering times has fallen by 15%, and we suggest that investors take further bargains. JPMorgan Chase said on Monday.

J.P. Morgan on Monday maintained its rating of overbooked shares in the happy times and raised its target price for the next 12 months from $130 to $140, 58% higher than last Mondays closing price.

JP Morgan said the increase was mainly due to the improved growth prospects of bigo, a global video social network owned by happy gathering times, followed by Baidus announcement of its acquisition of yylive, a live streaming service in China.

Just a day before muddy waters short report, baidu announced on Tuesday its $3.6 billion cash acquisition of huanju eras domestic video entertainment service. The delivery is expected to be completed in the first half of 2021. The company also obtained strategic investment and announced on August 10 that it would transfer its 30 million Huya shares to Tencent for $810 million.

J.P. Morgan believes that the cash position is good in the era of reunion, with net cash of $2.8 billion, accounting for 40% of the market value, and showing strong free cash flow generation capacity in 2017-2019.

Bigos views on overseas business

After the domestic video entertainment service was sold, the company almost allin overseas market, and its overseas video social platform bigo business, which it relies on, has great potential in JP Morgans eyes. This is the opposite of muddy water.

Morgan general said that in the third quarter of 2020, bigos revenue grew by 11% quarter on quarter, and its more famous products, bigolave and like, a short video social networking platform against tiktok, grew by 16% quarter on quarter (QoQ). This does not include the Indian market, which shows the strong growth momentum of bigo.

In addition, JP Morgan believes that the stock price catalysts in the coming quarters of the era of reunion include: bigos revenue growth is higher than expected, monthly balance of payments is achieved by the end of 2020, and geopolitical tensions are eased.

Source of this article: Chen Hequn, editor in charge of CFA_ NB12679