Huya (NYSE: HUYA), a leading game-centric, live-streaming platform in China backed by Tencent Holdings (OTC: TCEHY), saw its share price almost double from its March low on the back of the strong recovery in technology stocks. For investors who missed the boat earlier this year, it might not be too late to consider Huya stock now.
Founded in 2014 as a business unit within JOYY, Huya was spun off in 2018 and has morphed into a leading video game streaming platform in China with 168.5 million monthly active users (MAU). Revenue surged more than tenfold over the last three years to $1.15 billion in 2019, making it the largest live-streaming platform in China. It also reported its first annual profit of $67.2 million in 2019, thanks to its expanding margins.
These numbers indicate that Huya is capable of growing quickly and profitably. The latter also validates the potential behind the company's business model, which depends mainly on income from selling virtual goods. Moreover, as Huya continues to grow its business (more on this later), it could leverage its economies of scale to improve its margins. In other words, it could advance net profit at a faster pace than revenue in the future.
Source Fool.com