Global Livestreaming And AI Expansion Will Shape Markets Despite Risks

Key Takeaways

• Breakthroughs in AI-driven personalization, real-time translation, and targeted advertising are rapidly accelerating JOYY's margin and earnings growth beyond consensus expectations.
  
• Expansion into new regions, layered monetization in the creator economy, and diversified platform use are driving sustainable, above-market revenue and profit growth.
  
• Heavy reliance on livestreaming and exposure to regulatory, competitive, and demographic risks threaten future growth, profitability, and the success of JOYY's global expansion efforts.

Catalysts

Engages in the provision of social product matrix and communication technology.

• Analyst consensus suggests JOYY's ad tech and AI-driven content monetization technologies will gradually bolster margins, but these views understate the company's rapid and ongoing breakthroughs in personalized recommendation, real-time translation, and targeted advertising, which have already catalyzed outsized growth in conversion rates, driving meaningfully faster margin improvement and accelerated earnings expansion.
  
• Analysts broadly agree global expansion and diversification, especially into developed and emerging markets, should stabilize and grow revenues; however, this overlooks the flywheel effect created as JOYY leverages localized AI-driven features and payment innovations to unlock deeply underpenetrated regions, leading to a long runway for above-market user and ARPU growth that could far surpass consensus expectations for topline results.
  
• JOYY's unique integration of creator economy monetization-via innovations in digital gifting, virtual items, and enriched livestreaming tools-not only fosters stickier user engagement but also enables multiple, layered revenue streams per user, likely driving revenue growth at a structurally higher rate than peers and supporting resilient net margins.
  
• Ongoing expansion of use cases for the group's platforms-extending livestreaming beyond entertainment into commerce, education, and social connectivity-lays the foundation for additional high-margin verticals and opens incremental markets, setting the stage for accelerating future revenue and multi-year operating profit growth.
  
• Streamlined operations and portfolio optimization, together with JOYY's robust net cash position and disciplined, value-focused capital allocation (notably aggressive share buybacks and selective reinvestment), provide significant downside protection while setting up the company to rapidly capitalize on major industry and technology shifts, boosting both long-term earnings and shareholder returns.

JOYY Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on JOYY compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming JOYY's revenue will grow by 6.1% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 82.3% today to 3.9% in 3 years time.
• The bullish analysts expect earnings to reach $98.5 million (and earnings per share of $2.34) by about September 2028, down from $1.7 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 40.0x on those 2028 earnings, up from 1.9x today. This future PE is greater than the current PE for the US Interactive Media and Services industry at 16.6x.
• Analysts expect the number of shares outstanding to decline by 4.58% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.53%, as per the Simply Wall St company report.

JOYY Future Earnings Per Share Growth

Risks

• JOYY's primary revenue source remains heavily concentrated in livestreaming and virtual gifting, exposing the company to evolving user preferences, regulatory challenges, and potential declines in spending that could reduce long-term revenue and impact net profit margins.
  
• The company's emphasis on AI-driven innovation and data-centric advertising increases exposure to global trends in data privacy regulation; rising compliance costs and constraints on data utilization could erode future margins and limit the scale of JOYY's advertising business.
  
• Despite current sequential stabilization, the livestreaming user base faces structural headwinds from platform fatigue, shifting media consumption habits toward short video or AI-powered formats, and an aging demographic profile in core markets, posing a risk of user attrition and lower revenue growth.
  
• JOYY acknowledges intensifying global competition-not only from established tech giants but also regional startups-driving up user acquisition and content creator incentive costs, which may compress gross and net margins as the company seeks to retain market share.
  
• Increasing geopolitical risk and the potential for heightened scrutiny toward Chinese tech companies in key Western markets could restrict JOYY's international expansion opportunities and cross-border revenue streams, challenging its long-term earnings potential.

Valuation

• The assumed bullish price target for JOYY is $71.9, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of JOYY's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $71.9, and the most bearish reporting a price target of just $35.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $2.5 billion, earnings will come to $98.5 million, and it would be trading on a PE ratio of 40.0x, assuming you use a discount rate of 7.5%.
  
• Given the current share price of $63.68, the bullish analyst price target of $71.9 is 11.4% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.