Cheetah Surges 43% on Cash Dividend and Selling Remaining Stock in Bytedance

The mobile internet company hit a 12 week high.

Author: Anthony Russo   

Shares of Cheetah Mobile Inc. skyrocketed nearly 43% by midday Wednesday on the news of it approving a cash dividend and selling its remaining stake in Bytedance Ltd.

The Beijing-based mobile internet company said in a statement today that its cash dividend of $1.44 per American Depositary Share at an aggregate amount of $200 million will be paid on July 9 to shareholders. 

As for its sale in Bytedance, Cheetah expects it to result in a disposal gain investment of roughly $66 million in the second quarter. The deal will also add around $130 million in cash inflow to Cheetah's balance sheet. As of December, the company reported cash and cash equivalents, restricted cash, and short-term investments of $338.2 million. 

 "Cheetah Mobile has continued to return to our shareholders. In September 2018, its board of directors had approved a share repurchase program of up to US$100 million of our outstanding ADSs for a period not to exceed 12 months," Cheetah said in a statement today.

It continued, "The Company funded repurchases made under this program from its available cash balance. In 2019, the Company had repurchased approximately 4.5 million ADSs for approximately US$32 million under this program. The Company cancelled all the repurchased Cheetah ADSs". 

The announcement helped Cheetah hit a 12 week high of $3.28 per share today. After today's gain, Cheetah is hopefully of to the races after a challenging couple of months for the company. Today's high dates back to February when Cheetah had its roughly 45 apps banned from the Google Play Store. 

Coming off a weak fourth quarter, the company reported a revenue decline of 56% year-over-year, falling in at $87.9 million on a gross profit of $61.7 million. The company has noted that plummeting revenues have been a result of the deconsolidation of the live streaming platform, LiveMe. Cheetah is expecting to generate revenues in the range of $70 million and $78 million in the first quarter. 

Even with today's news, uncertainties around Covid-19 and how the company plans on improving revenues may slow Cheetah's acceleration sooner rather than later.