XNET - Xunlei: After A Long Wait, Special Situation Resolved To The Upside

2025-06-01 04:10:57 ET

Summary

• Xunlei's special situation—trading below cash with growing revenues—has resolved, and the stock is now fairly valued after surpassing my $3.50 target.
• Recent revenue stagnation, breakeven operations, and a lack of compelling catalysts mean there’s no longer a strong investment case at current prices.
• The Hupu acquisition, while strategic, does not appear to be an immediate game-changer and consumed a significant portion of cash on hand.
• With the negative enterprise value gone and limited growth and profitability, I’ve exited my position and see no reason to be long XNET at this time.

I first discussed a special situation regarding Xunlei ( XNET ) on August 29, 2022 when the stock was trading at $1.60. At the time the stock was trading well below cash, despite having growing revenues and being generally profitable. I updated this situation in Jan and June of 2023 during which time the stock price bounced around between $1.55 and $2.15 or so....

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