23 Dec 2021: Who will Tencent shed next? Douyu?

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I have seen reports suggesting that companies like Kuaishou Tech, Pinduoduo, etc may be next in the line after Tencent announced the distribution in specie the shares of JD... Tencent has stakes in pinduoduo, kuaishou tech, bilibili, huya, douyu, etc.

JD immediately tanks after that, with a fall of almost 7% in Hong Kong today. Thinking along this line of thought just to satisfy the naysayers, I wondered what will Tencent do if it has to choose between Huya and Douyu? Being a Huya shareholder, I naturally hope that it will be Huya if Tencent has to choose between Huya and Douyu.

Why? In the pursuit of the Chinese metaverse, Tencent cannot give up Huya, the game streaming leader in China since Huya has 85 million monthly active users in 3Q2021. Based on what I recalled, Douyu is only around 65 million MAU and is not profitable whereas Huya has been profitable for many quarters so far.

If Huya is to be chosen, I expect the game development team in Tencent will prefer to "assist" Huya as compared to Douyu. Given that Huya is already trading below cash per share at 7 USD, I would think that the only reason for Huya to be worth less than cash is that Huya has no brand equity or is going to lose money going forward. Will this happen? It would be helpful to assess the industry prospects as well as the execution abilities of Huya's management team.

As always, this should not be construed as any investment or trading advice.