DouYu International Holdings Limited (NASDAQ:DOYU), a leading live-streaming platform in China, saw its stock soar 5.25% in the intraday session on Friday, despite reporting disappointing third-quarter earnings results earlier in the week.
The company's Q3 earnings revealed a significant decline in its user base and average revenue per user (ARPU), leading to a 34.7% year-over-year drop in live-streaming revenues to $107 million. However, DouYu's other revenue segments, including innovative business and advertising, witnessed a 50% year-over-year growth, providing a glimmer of hope for the company's diversification efforts.
Despite the weak overall performance, with gross profit margins hovering around 6%, DouYu's strong cash position of $564 million against zero debt appears to have fueled investor optimism. The company's cash reserves provide a buffer to explore potential growth opportunities and revive its core live-streaming platform through user retention strategies and innovative offerings.
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