| Stock (Symbol) | Stock Price | |
YY (YY) |
$69 |
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| Data is as of | Expected to Report | Sector |
May 29, 2015 |
Aug 04 – Aug 10 |
Technology |
| Sharek’s Take | ||
 YY’s profit margins have shrunk from around 50% to around 40% because of a change in its business mix to have more user revenue sharing content (like YouTube does) as well as increased bandwidth costs and sponsor fees for game broadcasting. YY has many divisions: music which is maturing, online games which continues to grow, game broadcasting which is growing 100% this year but costs money for content, online dating which is a new division started in 2014 and is fueling the company now, and the next frontier will be online education. Analysts have lowered estimates due to the margin shrinkage, now profit growth is set to average just 5% the next few qtrs. YY’s gone up from $56 to $69 since last qtr and the P/E has risen from 15 to 20. With a slower profit growth period approaching, I’ve sold a good portion of shares in each client’s portfolio and have moved YY down in my Power Rankings from 1st to 5th. |
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| One-Year Chart | ||
 YY’s Est LTG just dropped from 68% to 26%. Yikes. Revenue could grow around 50% the next couple qtrs, but profit growth is set to climb just 13% and 3%. |
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| Earnings Table | ||
 Sales jumped 73% last qtr but this is less than the 91% 2QtrsAgo. Profit growth slowed to 25%.Margin shrinkage caused the company to miss analyst estimates by 9 cents. YY had been crushing estimates prior to that. Annual Profit Estimates got cut for the 2nd straight qtr. Quarterly estimates cut slashed and now profit growth doesn’t look good until four qtrs out. Next year YY should return to form. |
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| Fair Value | ||
 Although profits are being suppressed this year, 2016 looks very bright. This $69 stock could go to $120 in 18 months, which is just 25x current profit estimates. |
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| Ten-Year Chart | ||
 YY went on a tear after its IPO, then corrected before shooting back to new highs. Now the stock has had a lackluster year, which is good because maybe the stock will go under the radar again. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
5 of 23 |
YY is growing fast and has bright future ahead, but the changes to its business model will hold back profits for a few months. I’ve sold some shares in client accounts — but continue to like the stock — and will probably increase my position as 2016 approaches. |
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Aggressive Growth Portfolio
5 of 8 |
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