{ "docId": "019dd923-622c-750b-8b97-202fcba3bc0a", "docSlug": "4a1cd2416c13", "documentTitle": "Joyy Inc. (YY)", "authorId": "51_Muddy_Waters", "authorName": "Carson Block", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2020-11-18 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 57, "pageCount": 71, "prevPage": 56, "nextPage": 58, "slideType": "appendix_disclosure", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 8, "notes": "This slide functions as a forensic accounting narrative, citing specific SEC filings and financial restatements to support allegations of fraud.", "elementsJson": [ "paragraph", "footnote" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b97-202fcba3bc0a/57", "deckHref": "/decks/019dd923-622c-750b-8b97-202fcba3bc0a", "deckJsonHref": "/decks/019dd923-622c-750b-8b97-202fcba3bc0a.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b97-202fcba3bc0a#slide-57", "components": [ { "bbox": null, "kind": "callout", "text": "As a crowning revenue inflation achievement for David Li's checkbook, Bigo continually hid the fact that one-third of its business at the time of acquisition came not from overseas, but from mainland China.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-0394-7243-be97-8b1adf527cd0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.07, "w": 0.78, "x": 0.11, "y": 0.43 }, "kind": "paragraph", "text": "Yet, according to a June 2019 6-K filed with the SEC, US$165.5 million in sales came from the PRC, constituting approximately one-third of Bigo's total 2018 revenue. A near-equal amount, US$159.4 million, came from audio livestreaming.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "00d0ae5d-95de-4c99-bdca-11e150944138", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.78, "x": 0.11, "y": 0.18 }, "kind": "paragraph", "text": "Bigo's beautification measures helped generate enormous fair value remeasurement gains for YY, boosting the value of YY stock in turn. YY's 2018 Series D investment in Bigo led to a remeasurement gain of RMB 988.7 million, which equated to 46.7% of 2018 reported net income.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "35ebc756-0946-4647-b727-b68303e25f2d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.78, "x": 0.11, "y": 0.35 }, "kind": "paragraph", "text": "Press releases announcing the Bigo Series D round in June 2018 and the completion of the Bigo acquisition in March 2019 focused on Bigo Live and Likee, painting Bigo as a global play on livestreaming valued at $1.45 billion.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4f0af702-1d12-4477-852c-404b7c28fe73", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.07, "w": 0.78, "x": 0.11, "y": 0.26 }, "kind": "paragraph", "text": "As a crowning revenue inflation achievement for David Li's checkbook, Bigo continually hid the fact that one-third of its business at the time of acquisition came not from overseas, but from mainland China. We believe this mainland revenue to be almost entirely fake.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b37831d5-bb84-42e7-aed6-026b1b3468e7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.07, "w": 0.78, "x": 0.11, "y": 0.09 }, "kind": "paragraph", "text": "Because of its precarious financial position, Bigo continued to pretty itself up in preparation for an acquisition. In its 2018 Singapore filings, Bigo restated its financials, adding a China VIE, Guangzhou Baiguoyuan, which contributed an extra $110 million in revenues.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c0320f37-69a1-4055-a577-5073af02caf7", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "Bigo is a fast-growing global tech company. Headquartered in Singapore, Bigo owns BIGO LIVE, a leading global live streaming platform excluding China, LIKE, a leading short form video social platform worldwide, and other social apps. Bigo has created a video-based online community for global young generation users. It has established footprints in South-Eastern Asia, Southern Asia, the Middle East and America, paving the way for further global expansion. — Press release, June 2018", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-0394-7243-be97-8fdfca53b3f3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.28, "w": 0.78, "x": 0.11, "y": 0.62 }, "kind": "source-note", "text": "Footnotes 82-90 detailing specific SEC filings, financial statements, and press releases.", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "878ab3ac-092c-4893-bbbd-e54ddb46a926", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "5da61bda-94d5-4689-ad0f-a9c2574badc3", "evidence": "The slide systematically contrasts public claims with internal financial discrepancies to allege fraud.", "confidence": 0.9 } ], "arcBeats": [ { "to": 71, "from": 4, "beatId": "a6d172fd-e615-4921-ab5f-acf82f61ca10", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Expose Contradiction", "beatSlug": null, "evidence": "The report is filled with expose contradiction beats, revealing discrepancies in YY's reporting", "position": 0, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null }, { "to": 68, "from": 33, "beatId": "3c6771a1-f1c8-4750-b7e3-071b79a82bbf", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Appendix Data", "beatSlug": null, "evidence": "The report includes extensive data and examples to support its claims", "position": 2, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [ { "to": 60, "from": 54, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "fdee0086-cc98-4536-8195-0e821c22ed8a", "evidence": "The report implies that investors may lose money if they do not take action", "position": 2, "objective": "What are the consequences of not addressing YY's fraudulent practices?", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.6, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }