Why Shares of YY Inc. Skyrocketed Today

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What happened

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Shares of YY Inc.  (NASDAQ: YY) were up 21.8% as of 2:30 p.m. EST Wednesday after the China-based live-streaming social media platform announced quarterly results that easily outpaced Wall Street's expectations.

More specifically, for its third quarter of 2017, YY's revenue climbed 48% year over year to $464.8 million, which translated to 46.7% growth in adjusted net income to $96.1 million. Adjusted net income per American depositary share (ADS) climbed 41.2% to $1.59. By comparison, analysts' consensus estimates predicted significantly lower adjusted earnings of $1.45 per ADS on revenue of $422.8 million.

So what

YY's underlying business drivers were equally impressive. Mobile live-streaming monthly active users climbed 36.6% to 73 million, and total live-streaming paying users rose 46.5% to 6.3 million. The company also introduced a series of unique enhancements in its latest version of YY Live 7.0, including Accompany Me, Happy Basketball, and Clip Doll Online. 

"Our solid performance is a testament to our highly effective strategies in introducing more initiatives to attract younger generation users and to enhance existing users' engagement and consumption on our live streaming social media platform," stated YY chairman and CEO David Xeuling Li.

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Now what

If that weren't enough, for the the fourth quarter YY anticipates revenue of between RMB 3.4 billion (~$513 million) and RMB 3.5 billion (~$528 million), good for year-over-year growth of 36.5% to 40.6%. Here again, Wall Street was modeling lower fourth-quarter revenue of $484.2 million, or 29.5% growth from the same year-ago period.

All things considered, this was a straightforward beat-and-raise scenario for YY, and it's no surprise to see investors so aggressively bidding up its stock in response.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.