Why Joyy Stock Thrashed the Market on Thursday

Joyy (NASDAQ: JOYY) is a stock that certainly lived up to its name for investors on Thursday. The Asian social media company's American Depositary Shares (ADSes) rose by 6% in price that trading session, thanks to a pair of beats in its just-reported third quarter. Better-than-expected guidance helped too.

Joyy-ful

Joyy, which reports in U.S. dollars despite being headquartered in Singapore, published those results early Thursday morning. The company's net revenue was $540 million, down from $559 million in the same period a year ago. Yet it was high enough to top the consensus analyst estimate of $531 million and change.

Image source: Getty Images.

On the bottom line, net income in accordance with generally accepted accounting practices (GAAP) was 2% higher at $62 million, or $1.15 per ADS. This easily topped the $1.05 collectively expected by the pundits tracking Joyy stock.

Although the company suffered a 12% decline in its foundational livestreaming revenue (to under $389 million), this was partially mitigated by a very encouraging 29% rise in advertising revenue -- this came in at almost $113 million.

Its monthly average user (MAU) count in the mobile segment decreased to 266 million in the quarter, down from 272 million in the same period last year.

A beat on guidance, too

Joyy proffered revenue guidance for its current (fourth) quarter of $563 million to $578 million, which is well higher than the nearly $548 million consensus analyst projection.

While those trailing-quarter and guidance beats are encouraging, I'd be concerned about the drops in both financials and user metrics. The company seems to be more dependent on ad revenue, which can be volatile and reliant on trends. There was much to like about the third quarter results; however, I think care with this stock is warranted.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.