Who has the biggest cornnuts of them all? Jeffries. Hours before Huya reports earnings, Jeffries initiates coverage of Huya stock with a buy rating.
Jeffries gots brass.
Jefferies analyst Thomas Chong started Huya with a Buy rating and $26.80 price target. The analyst expects Huya to “ride on the increasing popularity” of e-Sports in China with “fast” revenue growth amid the early stages of game broadcasting monetization in China.
Hey wait a minute. Could a guy with the last name of Chong have a China bias? No matter.
E-sports are very popular in China where there is more gamers than the entire US population. The world spends US$109 billion on video games, and the Chinese are the biggest players. Mainland China is predicted to be worth US$27.5 billion this year, making it the world’s leader in gaming.
I don’t think it’s a coincidence that the Jefferies analyst gave a buy rating on Huya stock right after DouYu International, a leading game-centric live streaming platform in China and a pioneer in the eSports value chain, today report that total net revenues for the second quarter of 2019 increased by 133.2% to RMB1,872.7 million (US$272.8 million) from RMB802.9 million in the same period of 2018. Gross profit increased by 823.8% to RMB301.1 million (US$43.9 million) from RMB32.6 million in the same period of 2018, implying a gross margin of 16.1% in the second quarter of 2019 compared with 4.1% in the same period of 2018.