DouYu is a Chinese developer of live game streaming which listed on the NASDAQ in July 2019. The company was targeted by short-seller Grizzly Research in January 2021 alleging that it was hosting illegal activities and actively encouraging users to gamble on its platform to boost revenue. With Chinese regulators becoming more stringent, Grizzly believed there was substantial risk to the company's fundamentals. Grizzly forecast deteriorating profitability from 4Q20 onwards and substantial share price losses. DouYu did indeed report a QoQ sales decline in 4Q20, which has continued to 3Q21. Meanwhile, its share price has fallen by more than 90% since highs in early 2021. As such, the allegations seem validated.

Last updated July 2022.

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