What happened
China-based video game livestreaming company Huya (NYSE: HUYA) published its latest set of quarterly results early Tuesday, notching beats on both the top and bottom lines. The following day, however, this clearly wasn't good enough for investors, who traded the company's American depositary shares (ADSes) down by almost 6%. Several downward adjustments from analysts contributed to this darkening sentiment.
So what
That earnings release revealed that in its second quarter Huya booked total net revenue of 2.28 billion yuan ($336 million), which was down by 23% from the same period of 2021. Non-GAAP (adjusted) net income also fell, but more dramatically, landing at 5.9 million yuan ($869,000), or 0.02 yuan (less than $0.01) per ADS. The second quarter of last year saw the company net just over 250 million yuan ($37 million).
On average, analysts following the stock were expecting 2.27 billion yuan ($334 million) on the top line and an adjusted net loss of 0.48 yuan ($0.07) per ADS.
Although Huya benefited from an almost 8% rise in mobile monthly average users (MAUs), the company said macroeconomic "headwinds" had a punishing effect on its results.
Now what
In the wake of Huya's earnings report, three analysts adjusted their takes on the stock. The most bearish change from the trio came from Brian Gong at ever-influential Citigroup, who downgraded his recommendation to neutral from the previous buy. He also chopped his price target to $4 per ADS from the previous $6.
In his research note explaining the changes, Gong particularly expressed concern about rising content costs for Huya, a key expense for the company. The prognosticator expects the streamer to book bottom-line losses in the second half of this year.
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