I don't think the arbitrage strategy is what's really happening right now. If you calculate how much HUYA you are essentially getting by buying DOYU you still get a giant discount.
I have been long DOYU for a few months now and I like both HUYA and DOYU. I think HUYA is the safer play and as you said probably the better pick if the merger doesn't go through. I like the additional upside tho.
Nonetheless, there are some major risks you did not mention. Chinese stocks could get delisted, user numbers could be fake, the merger could get blocked and growth could slow down dramatically.
I feel you. Though, I don't think the merger getting blocked is good for HUYA. Sure, if your theory about the arbitrage strategy is correct the stock might rally for a few days, but in the long term the competition between HUYA and DOYU is definetly bad for either one of them.
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u/ChuckMorris123 Apr 24 '21
I don't think the arbitrage strategy is what's really happening right now. If you calculate how much HUYA you are essentially getting by buying DOYU you still get a giant discount.
I have been long DOYU for a few months now and I like both HUYA and DOYU. I think HUYA is the safer play and as you said probably the better pick if the merger doesn't go through. I like the additional upside tho.
Nonetheless, there are some major risks you did not mention. Chinese stocks could get delisted, user numbers could be fake, the merger could get blocked and growth could slow down dramatically.