Not afraid to short in muddy water

category:Finance
 Not afraid to short in muddy water


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.

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 sale of domestic video entertainment services in the gathering era, the company almost allin overseas market, and its overseas video social platform bigo business has great potential in JPMorgan Chase. This is completely opposite to the idea of muddy water.

Muddy water said last week that for the overseas version of the live broadcasting business, like the domestic live broadcasting business, there are also problems such as false operation data and revenue swiping.

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.

Therefore, JP Morgan believes that the value of the happy gathering era is obviously underestimated, and the company is the preferred target of our live broadcasting industry in China.. In addition to the money from the sale of YY live broadcast to Baidu, the net cash in the hands of happy gathering times is $6.4 billion. It is expected that in the future, more shareholder value-added actions such as share buybacks or special dividends will be carried out to further promote the stock price performance.

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