Xunlei Announces $20M Stock Buyback—What's Next

The online video company will repurchase up to $20 million worth of its shares, as it sits on a cash pile and a major investment that combined are worth more than twice its market value Key Takeaways: Xunlei announced it will repurchase up to $20 million worth of its stock, sparking a one-day rally for the shares The company has found a major new engine in international livestreaming services, but warned that growth is likely to slow after a period of rapid expansion It’s not often that you see investors get too excited about share buyback programs, even though they’re meant to be confidence boosters when management thinks a company’s stock is undervalued.

But at least in one case, a newly announced $20 million share repurchase plan by online video site Xunlei Ltd. 6% rally in the company’s shares after the announcement last Friday. Truth be told, the rally looks more like investors searching for a reason to buy the stock rather than any real change in the company’s outlook. Xunlei is a bit of a corporate chameleon lately, starting out as one of China’s earliest online video sites at its founding in 2003 when the Chinese internet was in its infancy.

The company was later overtaken by more aggressive and better funded rivals like iQiyi (NASDAQ: IQ ) and Youku, and then thought it found a better business as a cloud services provider. Then it decided several years ago that livestreaming offered even better potential, with a focus on emerging global markets. In March this year, it abruptly jettisoned its cloud business to focus on its other two areas, namely, the foreign-focused Hiya livestreaming business and its original domestically focused subscription business.

The brief Friday rally for Xunlei’s stock was part of a broader series of big ups-and-downs for the stock over the last year and a half as investors try to decide what to make of the company. At one point its shares rose by nearly five times from their levels at the end of 2024, only to give back much – but not all – of those gains. 36, the stock is still more than double the $2 level where it traded at the end of 2024. HK), another popular livestreaming site.

US) are actually losing money, which shows how difficult it is to succeed in China’s tough online video market. That may be why investors are showing some favor to Xunlei these days over its domestic peers, as the company is focusing heavily on its livestreaming business that offers services like sports events almost exclusively to people outside China. That business has been growing much faster than the company’s older subscription business that sells mostly to Chinese viewers, which seems like a prudent diversification.

The livestreaming business overtook subscriptions last year to become Xunlei’s biggest revenue source, fueled in part by its acquisition of Hupu, a provider of sports media and data, in June last year. 6 million, according to its latest quarterly report released in late May. The company didn’t say how much of the latest livestreaming revenue figure came from Hupu, which wasn’t contributing anything yet in last year’s first quarter.

But previous indications around the time of the acquisition appear to show the service was earning about $10 million in quarterly income at that time, meaning livestreaming revenue without the acquisition would still be up by around 40% in the first quarter. Looming overseas slowdown By comparison, the company subscription revenue rose by a slower 26% in the first quarter to $45 million. 6 million in first-quarter revenue, up 54% year-on-year, which presumably excludes contributions in the year-ago period from the company’s cloud services that were sold in March this year.

One factor that may have spooked investors this year is company signals that the golden days for international expansion may be limited. That’s not too surprising, since a growing number of Chinese companies are using a similar strategy these days as their home market slows after years of strong growth. Thus, it seems almost inevitable that these companies will start competing with one another overseas as well, especially in the Southeast Asian and Middle Eastern markets that have become two of their favorite places to expand.

"We will continue to intensify our overseas expansion, exploring new markets, and optimizing service offerings to sustain momentum," said Chairman Li Jinbo, on the company’s latest earnings call a month ago. 9% a year earlier. 1 million in the first quarter from $900,000 a year earlier. One other slight overhang for the company is pending litigation alleging Hupu’s unauthorized use of NBA content in its livestreaming services.

CFO Eric Zhou declined to comment on pending litigation in response to a question on the company’s earnings call. 1 million. But perhaps more importantly, Hupu could be forced to give up its streaming of NBA content if it loses the case. And this type of unauthorized usage, which is quite common in China, could also h