Shares of JOYY (NASDAQ:YY) stock are soaring on Thursday after an important statement issued by the China-based company.
On Wednesday, investment research source Muddy Waters claimed that JOYY’s livestreaming platform — YY Live — is fraudulent. This comes just days after Baidu (NASDAQ:BIDU) agreed to pay $3.6 billion in cash for YY Live.
Moreover, Muddy Waters Director of Research Carson Block believes that YY Live is around “90% fraudulent.” In fact, he even questioned Baidu’s purchase of “an almost completely fake business.”
“It was clear to us from early on that YY Live was almost entirely fake. YY Live is an ecosystem of mirages,” he went on to say. After he published his 71-page report, YY stock dropped 26.5%.
Then, on Thursday morning, JOYY responded by issuing a press release refuting the article. The firm said the short-seller report caused “anxiety and market disturbance” and made YY stock fluctuate. The video-based social media platform also said it shows that Muddy Waters does not understand China’s live streaming industry.
Additionally, JOYY made this clear in their release:
JOYY has solid cash balance and has consistently generated strong cash flow. To conclusively refute the report’s false allegation regarding the authenticity of JOYY’s profit figures, the Company is open to cash verification and diligence to be conducted by competent third-party advisers. The Company’s dividend policy of US$300 million announced in August 2020, with US$25 million already paid out in the third quarter of 2020, is also testament to the Company’s confidence in its operating cash flow.
JOYY also stated that it will continue its $300 million share repurchase program.
YY stock was up 17.5% as of Thursday morning.
On the date of publication, Nick Clarkson did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Nick Clarkson is a web editor at InvestorPlace.