DouYu Returns to Profit on Cost Cuts Despite Revenue Decline
China's DouYu Returns to Profit in Q1 on Cost Optimization
China's leading game live streaming platform DouYu returned to profitability in the first quarter of 2024, driven by cost optimization efforts. The company posted net profit and adjusted net profit, compared to a loss in the same period last year.
Revenue Decline and Cost Savings
First-quarter revenue fell 13% year-over-year to RMB 821.80 million, mainly due to lower livestreaming and social networking sales. However, profitability improved as the company reduced content, revenue-sharing, and bandwidth costs.
Outlook and Challenges
DouYu plans to bolster content supply and invest in offline events in coming quarters. However, weaker consumer spending and a lighter event calendar may impact user engagement.
Analyst Ratings and Stock Performance
The average analyst rating on the shares is 'hold'. The median 12-month price target is $5.00, flat from the May 27 closing price. The stock trades at 19 times forward earnings, up from a P/E of 14 three months ago.
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