Here’s the Reason Why Tuya Inc. (TUYA) Stock Declined in Friday’s Mid-day Session

Tuya Inc. (TUYA), an Internet of Things (IoT) cloud platform, has increased 6.48% in aftermarket trading session and was changing hands at $6.90 at the time of the writing. On Friday, TUYA closed the day at $6.48 after declining 11.11% during the mid-day session. The decline was attributable to the announcements of the investigation into the company.

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Investigations against TUYA

On Friday, Scott+Scott Attorneys at Law LLP, an international shareholders litigation firm, announced that it is investigating the alleged violation of securities law by TUYA or certain of its officers and directors. On 18th March 2021, the company conducted an initial public offering of its American Depositary Shares for $21/ADS. On 19th August, the company reported poor earnings results. On this news, TUYA fell more than 14%. The firm has alleged that the company has made materially misleading statements.

TUYA partnership with EAL

On 25th October, TUYA announced a strategic partnership with Erajaya Active Lifestyle. Erajaya is a leading company having a footprint in marketing, distribution, and retail of active lifestyle products. As a result of the cooperation between both the companies, the company’s intended to bring IoT 2.0 era in Indonesia by not just offering an individual smart product but also via offering smart experiences and homes. Moving forward, both the companies would continue developing more categories of premium smart home products for the Indonesian market.

Q2 2021 financial highlights

On 18th August, TUYA reported the financial results for the second quarter of the fiscal year 2021. The quarter ended on 30th June 2021. The company generated total revenue of $84.7 million against $38.8 million for the same period of 2020. The overall gross margin for the period increased 42.2% against an increase of 30.3% for the same period of 2020. The company had total cash and cash equivalents of $1.25 billion on 30th June. The gross profit for the period was $35.7 million against $11.7 million for the same period of 2020. The company suffered a net loss of $38.1 million during the period against $14.7 million for the same period of 2020.

Executive commentary

While commenting on the results, Mr Xueji (Jerry) Wang, Founder and Chief Executive Officer of TUYA said that the company is seeing continuous momentum across the entire business as it successfully executes its growth strategy and despite the troubles that are impacting the industry. He hoped that the results for next quarters would depict a marked improvement in the company’s performance.

Future for TUYA

During the previous three months, TUYA has declined more than 69% primarily due to abysmal second-quarter results. But as evident from the executive’s comments, the company is hopeful of improvement. So, potential investors should keep a close eye on TUYA stock.