Tuesday, Jul 13th 2021

Evaluating China’s regulatory halt on the HUYA-DOYU merger


The planned merger of Huya and Douyu -- China’s leading game live-streaming platforms, owning a combined 80%+ of industry active users -- came to a halt this week. China’s State Administration for Market Regulation concluded that HUYA-DOYU merger would strengthen Tencent’s 40% share in the online gaming industry and could have the effect of “excluding or restricting competition.”

Tencent, a holding in Titan’s Offshore portfolio, currently owns the majority share of HUYA and DOYU. Post-merger, Tencent would have owned the combined entity, helping the company to prioritize the distribution of their games on these live-streaming platforms.

Regulators’ decision to nix the deal marks the first major rejection of a merger between two of China’s internet companies. The decision arrives alongside a wave of increased Chinese government scrutiny over tech giants, with DIDI and BABA both navigating regulatory interventions.

Although increased regulation across China’s internet landscape remains a risk, we continue to believe in our original five-year thesis for Tencent. The company remains an excellent business to own, given its dominant WeChat network, outstanding unit economics, founder-led management team, and massive runway for growth across its mobile advertising, cloud services, and gaming segments.

Taking a step back, although the rejection of the HUYA-DOYU merger may slightly impact Tencent’s margins in the future, as the company may have to spend more on content distribution on a net-basis, Tencent remains the dominant player across the gaming industry through its ownership of tentpole publishers, its leadership in esports content and events, and its investments across live streaming platforms (e.g., HUYA, DOYU, BILI, Kuaishou, Trovo).

In the grand scheme of things, Tencent’s core businesses remain largely unchanged, and we will continue to hold our position in the name.

Back to Research ↗

Learn with titan

Investment articles and resources

Become the smartest investor you've ever been through straightforward, easy-to-read investment articles.

Understanding Actively Managed Crypto Strategies

What Is the IRA Annual Contribution Limit?

What Is Cryptocurrency?

What Is Bitcoin and How Does It Work?

Let's Get Started

Ready to become a client?

Create an account with us in two minutes.

Or scan to get the app

We're building the best investment platform, ever

Titan Global Capital Management USA, Inc ("Titan") is an investment adviser registered with the Securities and Exchange Commission (“SEC”). By using this website, you accept our Terms of Use and Privacy Policy. Titan’s investment advisory services are available only to residents of the United States in jurisdictions where Titan is registered. Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Past performance is no guarantee of future results. Any historical returns, expected returns [or probability projections] are hypothetical in nature and may not reflect actual future performance. Account holdings are for illustrative purposes only and are not investment recommendations. The content on this website is for informational purposes only and does not constitute a comprehensive description of Titan’s investment advisory services.

Refer to Titan's Program Brochure for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Titan’s fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. The introducing Broker Dealer is Titan Global Technologies LLC, a registered broker-dealer and member FINRA/SIPC. Brokerage services are provided to Titan Clients by Apex Clearing, an SEC registered broker-dealer and member FINRA/SIPC. For more information, see our disclosures. Contact: 508 LaGuardia Place NY, NY 10012. Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.

© Copyright 2022 Titan Global Capital Management, Inc. All Rights Reserved.