Key Takeaways:
Shares of EAST BUY (東方甄選, 1797.HK) tumbled more than 4% in early trading on Monday after four of its most popular hosts announced their resignations over the weekend. The live-commerce platform's stock fell to a low of HKD 25.18 before closing at HKD 26.36, a 4.08% drop, on turnover of HKD 123 million.
"The departures were due to changes in the company’s management and corporate philosophy," hosts Mingming and Tianquan said in separate statements. The other two hosts who resigned were Zhong (Huoshang) and Linlin. The resignations are a significant blow to EAST BUY, as popular hosts are the main revenue drivers in the competitive world of Chinese live-commerce.
EAST BUY Chairman Yu Minhong said he had held "sincere discussions" with the four hosts in an attempt to retain them but ultimately respected their decisions. He also acknowledged that "deviations had emerged in the company’s management approach following management adjustments," and said the company will "optimize its management model going forward."
The resignations highlight the "key person risk" inherent in the live-commerce business model, where the popularity and influence of individual hosts can have an outsized impact on a company's fortunes. The departure of the four hosts, who have a large and loyal following, could lead to a significant loss of viewers and revenue for EAST BUY.
Despite the management turmoil, Daiwa raised its price target on EAST BUY to HKD 30 and reiterated its Outperform rating on the stock.
This article is for informational purposes only and does not constitute investment advice.
