Tuya (NYSE:TUYA) Valuation: Assessing Upside After Net Profit Turnaround in Latest Earnings

Tuya (NYSE:TUYA) just posted third-quarter earnings that caught investor attention, as the company moved from a net loss to a net profit and delivered higher sales compared to last year.

See our latest analysis for Tuya.

Tuya’s recent move into profitability has come alongside a series of announcements about smart energy solutions and green tech partnerships, but the latest earnings beat had the most significant impact on sentiment. The share price has experienced short-term swings, yet momentum is building, helping push the 1-year total shareholder return to 38.2% and 100% over three years. This signals renewed confidence in Tuya’s long-term potential as it positions itself in the expanding AI and smart device ecosystem.

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So with shares up sharply after Tuya’s return to profitability and strong annual gains, is the stock still undervalued with more upside ahead? Or have investors already factored in its future growth prospects?

Most Popular Narrative: 33.4% Undervalued

Tuya’s current share price of $2.21 sits well below the most widely followed narrative’s fair value estimate of $3.32. This suggests analysts expect significant upside if the company delivers on its ambitious growth transition and global expansion plans. This sets the stage for a more detailed look at what is fueling optimism around Tuya’s earnings power and platform shift.

Ongoing expansion of SaaS and value-added services, with SaaS segment revenue growing at a faster rate than PaaS and achieving over 70% gross margin, is structurally shifting Tuya's business model toward higher-margin, recurring revenue. This supports long-term gross margin improvement and greater earnings visibility.

Read the complete narrative.

What happens when a company dramatically transforms how it makes money? Learn which unusual margin leap and recurring earnings move the narrative expects to drive a powerful re-rating. The story behind these numbers could change the way you see Tuya’s future forever.

Result: Fair Value of $3.32 (UNDERVALUED)

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

However, Tuya’s outlook could change if supply chain challenges worsen or if global trade tensions persist, as both factors could pressure revenue and margins unexpectedly.

Find out about the key risks to this Tuya narrative.

Build Your Own Tuya Narrative

If you see Tuya’s story differently, consider diving into the numbers and building your own perspective. It takes only a few minutes to uncover new insights. Do it your way

A great starting point for your Tuya research is our analysis highlighting 5 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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