JOYY: A Bull Case Theory for a Global Social Entertainment Engine

The bull case for JOYY is built on a definitive strategic break. The company has completed its transformation from a China-centric live-streaming operator to a global technology powerhouse. This pivot was cemented by the final payment of $240 million received on February 25, 2025 for the sale of its YY Live business to Baidu, a transaction that valued the unit at $2.1 billion. That sale was not an exit but a necessary step to fund and focus on a new, international future.

Today, JOYY operates as a true global platform. Its core businesses, Bigo Live and Likee, serve a massive and diverse audience, with 266.2 million global monthly active users spread across over 150 countries. This scale is the foundation of its new identity. The symbolic change of its ticker from YY to JOYY in March 2025 was a clear signal: the company has fully transitioned to a global technology company, shedding its past to embrace a future defined by international reach and diversified growth.

This new setup is backed by formidable financial strength. The proceeds from the YY Live sale, combined with strong operational cash flow, have built a fortress balance sheet. As of the end of 2025, the company held $3.32 billion in net cash, providing ample fuel for investment and a significant cushion against volatility. The growth model itself is now dual-engine. While live-streaming gifting remains a powerful revenue driver-pulling in $388 million in gifting revenue in Q3 2025-the company is aggressively building its advertising business, which contributed $104 million in the same quarter. This diversification, coupled with a massive global user base, creates a more resilient and scalable engine for future earnings. The pivot is complete, and the company is positioned to capture growth from the world's largest digital entertainment markets.

The Dual-Engine Growth Model: Resilience and Diversification

The company's new global scale is now translating into a more resilient and diversified financial engine. JOYY's growth is no longer dependent on a single stream. The dual-engine model is firing on all cylinders, with both its core live-streaming business and its advertising platform showing clear momentum.

The first engine, the live-streaming gifting business, is demonstrating a steady recovery. In the third quarter of 2025, it generated $388 million in gifting revenue, marking the second consecutive quarter of sequential growth after a period of decline. This rebound is critical, as it provides the stable, high-margin foundation for the company's operations. The business is now showing a clear upward trajectory, which is a prerequisite for sustained profitability.

Simultaneously, the second engine-the advertising business via BIGO Ads-is accelerating. It contributed $104 million in revenue in the same quarter, representing a robust year-over-year growth of 33.1%. More importantly, advertising now accounts for 28.1% of total revenue, a significant and growing share. This rapid expansion is diversifying the revenue base and tapping into a different, often more scalable, monetization model. The company is clearly leveraging its massive user base to build a technology-driven ad platform, a move that reduces reliance on gifting cycles.

The financial strength of this dual approach is evident in the bottom line. Despite earlier goodwill impairment charges, the company's operational profitability is improving. Non-GAAP operating income grew 16.6% year-over-year in Q3 2025, a clear signal that the company is converting its top-line growth into better earnings. This improvement in profitability, coupled with the massive $3.32 billion in net cash on the balance sheet, provides the financial runway to fund both engines' growth without compromising the fortress balance sheet.

Viewed together, this is a path to sustainable growth. The live-streaming engine is stabilizing, while the advertising engine is scaling. This diversification mitigates risk from any single market or monetization trend. It creates a more predictable and resilient earnings stream, which is the hallmark of a mature, global technology platform. The company is no longer chasing growth; it is building a durable engine for it.

Capital Allocation and Financial Flexibility

The company's substantial war chest and disciplined capital allocation provide a clear margin of safety and a powerful engine for value creation. As of September 30, 2025, JOYY held $3.32 billion in net cash, a fortress balance sheet that offers immense financial flexibility. This capital is not idle; it is the fuel for growth and the bedrock of shareholder returns.

The execution of a $900 million shareholder return plan through dividends and share repurchases demonstrates a commitment to returning capital to investors. The company has already distributed $148 million in dividends and repurchased $89 million worth of shares through mid-November 2025. The recent announcement of a fourth-quarter dividend of $0.97 per ADS payable in January 2026 is a tangible signal of confidence and a direct return of cash to owners.

More importantly, the raised revenue guidance for the fourth quarter-projecting $563 million to $578 million-frames this capital return within a context of operational execution. The company is not merely distributing cash; it is doing so while guiding higher for the year. This combination of a strong balance sheet, a defined return program, and improved forward visibility signals a focus on capital allocation discipline. It provides a cushion against market volatility while simultaneously rewarding shareholders for their patience during the strategic pivot.

The bottom line is that this financial setup enhances value in multiple ways. The net cash position reduces financial risk and provides ample runway for investment in growth initiatives. The shareholder returns directly increase per-share value. And the alignment between raised guidance and capital returns builds credibility, reinforcing the bull case that JOYY is executing its global strategy with both financial strength and operational focus.

Monetization Pathway and Catalysts for Re-rating

The path to a re-rating is now clear. With a global user base of 266.2 million monthly active users established, the primary lever for increasing value is expanding monetization per user. The company must lift its average revenue per user (ARPU) to unlock the full potential of its scale. This requires a multi-pronged operational push, with sequential growth in non-livestreaming revenue serving as the most critical near-term catalyst.

The diversification thesis hinges on the acceleration of advertising. In the third quarter, BIGO Ads revenue grew 33.1% year-over-year to $104 million, a robust pace that underscores the platform's maturing ad technology. More importantly, this segment now accounts for 28.1% of total revenue. Sustained sequential growth here is the key indicator that the company is successfully monetizing its audience beyond gifting, building a more scalable and resilient revenue stream. This is the first major catalyst for a re-rating: proving that the advertising engine can continue its rapid expansion.

The operational engine driving this expansion is the company's focus on AI. JOYY is deploying artificial intelligence to optimize content distribution and payment processing. This isn't just a tech upgrade; it's a direct lever to improve user engagement and conversion rates. By using AI to surface the right content to the right users, the company can increase time-on-platform and gifting activity. Similarly, optimizing payment flows reduces friction, turning more user intent into actual revenue. This focus on operational efficiency is critical for lifting ARPU without needing to acquire new users.

The bottom line is that the re-rating catalysts are sequential and measurable. First, watch for continued acceleration in advertising revenue growth, which validates the diversification thesis. Second, monitor the company's ability to leverage its massive user base and AI-driven operations to steadily increase ARPU. The combination of a fortress balance sheet, a dual-engine growth model, and a clear path to higher monetization per user creates a setup where the stock's multiple can expand as execution meets expectations.