Chinese social media Joyy refutes Muddy Waters’ fraud claim, saying its metrics are ‘commonly used’ by live-streaming industry
- Livestreaming has become a key revenue engine for companies in the internet sector, Joyy said in a statement
- The firm tried to reassure investors by pointing to its solid cash balance and cash flow generation, adding that it would proceed with a US$300 million share buy back
Chinese social media firm Joyy has issued a stronger rebuttal of Muddy Waters’ claims that the company is “a multibillion-dollar fraud”, saying the US short seller’s report “lacks a basic understanding” of China’s live-streaming business.
“Muddy Waters’ report shows its lack of a basic understanding of the live-streaming industry in China,” Joyy said in a statement issued Thursday evening. “The company believes that the report contains numerous errors, unsubstantiated statements, and misleading conclusions and interpretations.”
On Wednesday Muddy Waters released a report that claimed up to 90 per cent of YY Live’s live-streaming revenue was fraudulent. “Users” who paid for virtual gifts were “almost entirely bots” from YY’s internal network or from external bot farms, as well as performers “roundtripping” their own gifts, according to the report.
Bots with links to YY’s own servers, but disguised as paying users, accounted for about half the value of all virtual gifts, Muddy Waters claimed. The short seller also called out YY’s online dating business and Joyy’s overseas live-streaming platform Bigo Live, claiming up to 80 per cent of their respective revenues were fake.
“The operating metrics disclosed by Joyy are commonly used and publicised by its industry peers. Livestreaming has become a key revenue engine for companies in the internet sector,” Joyy said in the statement.
The statement did not specifically address Muddy Waters’ claim that bots from YY’s internal network were the main source of payments for virtual gifts.