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Videogame Streamer Huya Double Downgraded by CLSA to Underperform

Huya shares fell on Monday after CLSA analyst Sally Chan downgraded the videogame streamer to underperform from outperform.
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Huya  (HUYA) - Get HUYA Inc. American depositary shares each representing one Class A Report shares fell on Monday after CLSA analyst Sally Chan downgraded the videogame streamer to underperform from outperform.

Huya recently traded at $24.39, down 8.9%. The shares have fallen 9% over the past six months.

Chinese regulators are looking over Huya's proposed acquisition of rival DouYu International  (DOYU) - Get DouYu International Holdings Limited Report for $6 billion Tencent TCEHY owns shares in both and would have a 68% stake in the combined company.

In December, Chinese regulators said they would scrutinize the deal to see whether it violates China’s monopoly laws, since the combined company would control 80% of the videogame-streaming market. China’s regulators are investigating Alibaba  (BABA) - Get Alibaba Group Holding Limited American Depositary Shares each representing eight Report for monopolistic practices.

Meanwhile, on Monday Huya also said in a Securities and Exchange Commission filing that Fil Ltd./Bermuda sold $26.3 million of Huya shares in the fourth quarter. That’s 1.08 million shares, or 1.3% of Huya’s shares outstanding. 

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After the sale, Fil owns 4.33 million, or 5.2%, of the shares outstanding with a market value of $105.5 million, Bloomberg reports.

China’s Tencent is the world's biggest videogame company. In November, after Tencent’s third-quarter-earnings report, Morningstar analyst Dan Baker raised his fair value for the stock to $84.40 from $77.

“We lifted our revenue estimate for the gaming businesses, increased the market valuation of investments and adjusted the Chinese yuan-Hong Kong dollar exchange rate,” he wrote in a commentary.

“We think Tencent has put more of the focus on cloud and advertising businesses following its reorganization. … Tencent is transforming from consumer internet to industrial internet.”

Tencent recently traded at $95.15, down 0.3%.