DouYu landed on Nasdaq in July 2019 (Photo/VCG)

Mar. 4 (NBD) -- In separate statements issued on Monday and Tuesday, three U.S. shareholder rights law firms - The Schall Law Firm, Robbins LLP, and Johnson Fistel LLP, said that they are investigating DouYu International Holdings Ltd ("DouYu", NASDAQ: DOYU) for potential violations of U.S. federal securities laws.

National Business Daily (NBD) noticed that poor performance of the Chinese game-centric live-streaming platform on the stock market since its initial public offering ("IPO") triggered the investigations.

DouYu completed its IPO in July 2019 at a price of 11.50 U.S. dollars per American Depositary Share (ADS). However, since the IPO, DouYu stock has plunged. On March 3, 2020, shares closed at 7.98 U.S. dollars per ADS, a drop of 30.6 percent from the offering price.

On December 18, 2019, an article published by Yahoo Finance listed DouYu as one of "the 5 worst performing IPOs of 2019."

It's nothing new to see a law firm investigating Chinese companies which are listed in the U.S. Investigation announcements made by the law firms didn't impact share prices of DouYu. The company's stock even climbed up 2.31 percent on Tuesday.

What really matters is the live-streaming platform's financial performance, especially its profitability.

NBD found that DouYu reported net losses of 165.4 million yuan for the third quarter of 2019, after a net profit of 23.2 million yuan for the second quarter of the year.

Bloomberg projected the live-streaming platform's revenue to be 2 billion yuan and net profits to be 67.73 million yuan for the fourth quarter of 2019. If DouYu can prove its profitability as expected, its stock performance will possibly be changed.

Email: lansuying@nbd.com.cn