DouYu International Holdings Limited (DOYU) saw its shares surge by 6.96% in the pre-market trading on Thursday, despite reporting disappointing second-quarter earnings results. The company's weak financial performance was overshadowed by its potential for further shareholder capital returns, thanks to its substantial cash reserves.
In the second quarter of 2024, DouYu's revenue fell by 25.9% year-over-year to RMB 1.032 billion, missing analysts' expectations. The company's live-streaming business, which accounts for over 76% of its revenue, suffered a 37.2% decline due to challenging macroeconomic conditions in China. DouYu's operating loss also widened significantly to RMB 119.6 million, further disappointing investors.
However, DouYu's cash and cash-like assets of RMB 6.561 billion ($903 million) at the end of Q2 2024 exceeded its market capitalization of around $241 million. This substantial cash position has fueled speculation that the company could initiate new share buybacks or distribute additional special dividends, bolstering investor confidence and driving the pre-market surge.
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