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Why Is Joyy Stock Trading Lower Tuesday?

Anusuya Lahiri
·2-min read

Joyy Inc (NASDAQ: YY) stock is trading lower on Tuesday following news that its proposed $3.6 billion sale of YY Live, a live-streaming business in China, to Baidu Inc (NASDAQ: BIDU) has fallen.

The deal, unveiled in November 2020, was intended to close in the first half of 2021 but lapsed without regulatory approval.

Baidu's affiliate Moon SPV terminated the share purchase agreement, citing unmet conditions, including the failure to secure support from authorities, Bloomberg reports.

This development represents a significant setback for Baidu, which had eyed the acquisition as part of a broader strategy to diversify its content offerings and revenue streams.

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Also Read: Chinese Gaming Giants Bounce Back: Tencent and NetEase Stocks Surge Amid Revised Game Rules

The collapse of this deal highlights Baidu's challenges in the digital video and live-streaming sector, particularly against competitors like ByteDance Ltd.

Joyy, a pioneer in Chinese live-streaming, has a global user base with 1.61 million paying users and generated $236 million in revenue from China in the first nine months of 2023.

This incident underscores the Chinese government's tighter grip on significant tech acquisitions and its efforts to regulate the private sector more stringently.

Although there has been a recent easing in the crackdown on the tech industry to boost economic growth, the authorities remain cautious, particularly around online gaming and entertainment sectors.

The refusal to approve Baidu's acquisition of Joyy's YY Live aligns with the government's ongoing initiatives to combat gaming addiction and control minors' exposure to online entertainment.

This cautious approach was evident in the recent draft rules to curb gaming time and expenditure, reflecting the state's prioritization of regulatory control over the rapid expansion of tech companies.

YY Price Action: YY shares were trading lower by 9.70% at $35.85 premarket on the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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