🎮 DouYu $DOYU is known as the Twitch of China and is the largest video game streaming service in the world. China has the largest video game industry in the world growing at a fast rate of about 25% per year. Outside China, people use Twitch (owned by Amazon $AMZN ) and YouTube (owned by Google $GOOG ) but these two are banned in China. The alternatives in China are Tencent $0700.HK , Huya and Douyu.
💸 The revenues of DouYu increased by 93% per year in the last four years and they are now profitable. DouYu doesn't have any debt with really good balance sheet.
🤝 Huya and DouYu are going to merge in a 100% stock transaction. There's the possibility of making money by arbitrage with a spread of over 30%. The spread is so big because of the recent crackdown on Alibaba $BABA . Tencent owns 37% of DouYu and 51% of Huya and this deal may face antitrust regulations.
💰 At the price at which DouYu is today it is undervalued. It is a value stock even if the deal doesn't go through.
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