Tuya (NYSE:TUYA): Examining Valuation After Special Dividend Declaration Signals Management Confidence

If you are holding shares of Tuya (NYSE:TUYA), the latest announcement might have you reassessing your next move. The company has just declared a special cash dividend of $0.054 per share, with key dates set in September and an upcoming October payout. These special dividends are not routine and such a move can signal that Tuya’s management feels confident about the current financial position, enough to share extra capital directly with shareholders.

This development comes after a period of clear momentum for Tuya. Over the past year, the stock has climbed 75%, with returns accelerating over the past month and quarter. Year-to-date, it has surged more than 51%. This pattern arguably shows investors responding to not only operational growth, with annual revenue and net income both up, but also to signals like this dividend that hint at long-term stability. Previous months have seen steady, if unspectacular, advances, making recent events stand out for those tracking the company closely.

With all this in the mix, is the current price reflecting Tuya’s future growth, or does the special dividend reveal extra value the market is still missing?

Most Popular Narrative: 19.5% Undervalued

According to community narrative, Tuya shares are seen as undervalued by approximately 19.5% versus their estimated fair value. This perspective is driven by expectations of accelerated earnings and margin expansion as the company invests in AI, hardware, and global ecosystem development.

Tuya's commitment to AI R&D, including launching proprietary AI large models and advancing on-device AI, aims to enhance smart product experiences and drive penetration of smart devices. This could potentially increase future revenues. Expansion into hardware solutions beyond their traditional PaaS model allows Tuya to offer more competitive solutions across various verticals such as hospitality, real estate, and renewable energy, which could boost revenue growth.

Curious about what’s fueling this bullish price target? The real story lies in Tuya’s ambitious growth roadmap, where advanced AI, new revenue streams, and dramatic earnings shifts all play a role. Behind the headline is a calculated formula of growth assumptions and margin bets. Want to know the numbers that underpin the hype? Find out how expectations for future profits could reset Tuya’s valuation narrative.

Result: Fair Value of $3.28 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the path forward is not guaranteed. Early-stage AI integration and pivots into new verticals could pressure margins and disrupt revenue predictability.

Find out about the key risks to this Tuya narrative.

Another View: A Different Take on Value

But what does our DCF model suggest about Tuya’s value? This approach, which uses projected cash flows, actually points to a less optimistic result and suggests the stock may be overvalued at current prices. Does this difference from the earlier bullish view affect your confidence?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Tuya for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Tuya Narrative

If you have a different angle or want to dive deeper, you can shape your own insights using the same data in just a few minutes. Do it your way.

A great starting point for your Tuya research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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