Momentum was surging for Joyy Inc. (YY) heading towards the end of 2023, as Baidu was set to acquire the Singapore-based streaming company in an all-stock acquisition.
However, the deal has fallen through according to a filing in Hong Kong. YY is down 15% so far in the first trading session of 2024.
While some say this is a reflection of Baidu’s ability to diversify revenue, they claim that the deal was terminated after Joyy failed to fully satisfy the closing conditions of the deal before the end of the year. This may have something to do with obtaining necessary regulatory approvals from government authorities.
This deal has been in the works for years, and way back in 2021 rumors began swirling that China’s antitrust regulatory body would likely abolish the deal. China wants to maximize control of its companies that collect large amounts of consumer data in an effort to squash monopolies before they form.
Joyy says that it is seeking legal assistance in this manner, as the company claims the deal was “substantially completed on February 8, 2021”.
This is a huge disappointment for YY investors who were eager to cash in on years of patience. It’s also a lesson in hindsight being 20/20, as the stock soared to $135/share in February 2021 on the initial news of the deal. Today, the stock has fallen to just $33/share.
As the live-streaming company continues to expand globally with active users rising to 277 million, is there any reason to hold onto the hope that YY can turn things around?
We’ve assessed the current opportunity with this stock through the VectorVest stock forecasting software and found 3 things investors need to know after today’s news.
YY Has Excellent Upside Potential and Fair Safety, But Poor Timing Holding it Back
VectorVest is a proprietary stock rating system that gives you all the insights you need to make clear, calculated decisions in 3 simple ratings. These are relative value (RV), relative safety (RS), and relative timing (RT).
Each sits on its own scale of 0.00-2.00 with 1.00 being the average, saving you time and allowing for effortless interpretation. You’re even given a clear buy, sell, or hold recommendation for any given stock at any given time based on these ratings. As for YY, here’s what we found:
- Excellent Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted 3 years out) to AAA corporate bond rates and risk. It offers much better insights than a simple comparison of price to value alone. As for YY, the RV rating of 1.56 is excellent. The stock is also undervalued right now with a current value of $60.65.
- Fair Safety: YY is a fairly safe stock with an RS rating of 0.92, which is just below the average. This risk indicator is calculated through an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors.
- Poor Timing: The one thing holding this stock back is the negative price trend pushing its price lower and lower. The poor RT rating of 0.63 is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 1.06 is fair for YY, but the stock is currently rated a SELL in the VectorVest system. We encourage you to learn more about the situation and make an informed decision through a free stock analysis today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. YY is down more than 15% in Tuesday’s trading session after Baidu canceled its acquisition of the Singapore-based streaming company. The stock still has very good upside potential and fair safety, but its timing is poor.
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