Why Huya Stock Jumped Thursday

What happened

Shares of Huya (NYSE: HUYA), an online game-streaming platform in China, surged on Thursday. The stock shot up as much as 23% but closed the trading day up 13%.

Huya’s gain builds on a strong bullish trend for the stock since it went public last month, as well an optimistic analyst note earlier this week in which it received a buy rating. Shares have also been rising steadily since Huya reported its fiscal first-quarter results on June 5.

Image source: Getty Images.

So what

“As the first pure-play game live streaming company to go public, we believe Huya is a solid name to own with a robust content ecosystem, strong user metrics, and scalable business model,” said Needham analyst Jinjin Qian earlier this week (via MarketWatch). Acknowledging that the stock isn’t cheap, Qian said, “[U]pside exists given its leadership position, revenue growth, improving profitability, and monetization upside potential.”

Though Qian has a buy rating on the stock, Huya’s 24% gain so far this week means shares are now trading above her $41 price target.

Huya is up a total of 181% since its IPO in May.

Now what

Though Huya’s 111.5% year-over-year increase in fiscal first-quarter revenue was impressive, the midpoint of management’s guidance range would notably represent an acceleration in this growth, highlighting Huya’s strong momentum. Management expects fiscal second-quarter revenue to rise between 110.2% and 115.7% year over year.

“Our results build confidence in our strategy and solidify our leadership position in the game live streaming market,” said Huya CEO Rongjie Dong in the company’s first-quarter earnings release earlier this month. “We are excited about our prospects as we devote our attention to growing our core business and exploring ways to further diversify our revenue streams in the future.”

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