Are Joyy (YY) and Cloudflare (NET) undervalued at the moment? Is the pandemic increasing the growth rate of these companies?
This is Sailesh Tirupasur. I'm a part of Stock Card's summer internship program in 2020, and this post is a part of my Stock Battle series. I don't own these two stocks, and my goal here is to study them to decide whether to invest or not.
These stocks are apart of our Companies Shaping the Future stock list. If you want to see other stocks in this category, click here.
Stock research and analysis:
Two stocks that seem to have high growth potential in the coming years are Joyy (YY) and Cloudflare (NET). Joyy is a Chinese based social media and online digital streaming platform that has garnered a large amount of attention in the east. China's population is around 1.4 billion people, and almost 800 million of these people have access to the internet. That is more than double the population of the United States to put it into perspective. With a considerable audience to potentially attract, investors are excited about the future of this company. Joyy's stock is up 50% year-to-date, and the share price chart shows that it wasn't hit as hard by COVID-19 than other companies. A critical part of Joyy's growth in recent months is its acquisition of a Singapore based live streaming platform called Bigo. Bigo has become the 5th fifth largest site in the world for streaming apps and is continuing to grow. Experts are raising Joyy's price target to about $125, which is a massive $43 difference from the current share price.
Cloudflare is a multibillion-dollar online network operator that offers content delivery network services, web infrastructure and website security, and domain name server services for businesses. With more people working remotely from home and businesses relying on teleconferences, Cloudflare's products and services are in high demand. The last earnings report shows that Cloudflare's revenue is surging and beating the predicted forecasts by a wide margin. It also reported 250,000 new customers in the previous quarter, which adds to their existing customer base of over 2.5 million. With revenue and sales doing well, experts are raising the price target to around $52, which is $15 more than the current share price.
Although both companies have strong qualities for the current landscape of their market, Joyy seems to have more explosive growth potential. While the pandemic has shot Cloudflare up significantly, Joyy seems likely to succeed due to a massive market that it can tap into.