Daily BriefsTMT/Internet

TMT: Baidu, BASE Inc, DoorDash Inc, iQIYI Inc, S&P 500 and more

In today’s briefing:

  • Baidu: Acquisition of YY Live Is More Beneficial to JOYY than Baidu
  • Base Inc Bubble Is Still Far From Bursting
  • DoorDash IPO – Unprofitable Despite Pandemic Boost
  • Iqiyi: Another Tough Quarter
  • U.S. Equity Strategy: Remain Bullish

Baidu: Acquisition of YY Live Is More Beneficial to JOYY than Baidu

By Shifara Samsudeen, ACMA, CGMA

  • On 16th November, Baidu (BIDU US)  announced that it has entered into a definitive agreement with JOYY (YY US)  to acquire its domestic video-based entertainment live streaming business in China (known as YY Live). JOYY will retain its overseas business.
  • The deal includes YY mobile app, YY.com website and PC YY, among others, for an aggregate purchase price of approximately US$3.6bn in cash and the transaction is expected to occur in 1H2021 subject to certain conditions.
  • According to Baidu, YY Live stands to benefit from the company’s large traffic and thriving mobile ecosystem while Baidu will receive immediate operational experience and knowhow for large-scale video-based social media development, as well as a creator network that will further strengthen Baidu’s massive content provider network.
  • Baidu has been a late entrant to the thriving short video app market in China which is currently dominated by Douyin and Kuaishou. Baidu has been attempting to reduce its dependence on core advertising revenues, however, these efforts are yet to make any meaningful impact on the company’s top line and margins.

Base Inc Bubble Is Still Far From Bursting

By Oshadhi Kumarasiri

Following two extremely successful quarters, BASE Inc (4477 JP) shares rallied more than 1,000% from its IPO price to reach a high of ¥16,510 per share before declining 40% to ¥9,920 after the 3Q20 results release on 16th November 2020.

In its short history, Base Inc is known for showering investors with an overwhelming amount of information, mostly immaterial and unnecessary disclosure which could distract investors from reality. The unwarranted share price rally may have started this trend, as the company did its best to stay relevant and within sight of investors all times.

DoorDash IPO – Unprofitable Despite Pandemic Boost

By Mio Kato

DoorDash is joining the long list of unprofitable companies touting revenue growth and the now customary “contribution margin” improvement as reasons to favour their stock. The timing is opportune given a nice boost to demand from lockdowns and the punchy looking growth numbers that have been the result of this. However, there are some concerns as well. Below we examine the company’s business model and flag some interesting points in the S-1.

Iqiyi: Another Tough Quarter

By Rickin Thakrar

iQIYI Inc (IQ US) shares dropped 15% yesterday post the release of its 3Q20 results which showed sales growth turning negative in the quarter despite an easy comp. On top of this, Iqiyi’s balance sheet remains stretched amidst a tough competitive environment. Our thoughts are below

U.S. Equity Strategy: Remain Bullish

By Joe Jasper

In our November Strategy book we summarize the basis for our bullish outlook, discuss the deservedly hot topic of value vs. growth. and highlight actionable opportunities within our Manufacturing, Transportation, Materials, Technology, & Consumer Discretionary Sectors.

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