The WACC of HUYA Inc (HUYA) is 5.3%.
| Range | Selected | |
| Cost of equity | 4.40% - 8.10% | 6.25% |
| Tax rate | 11.10% - 17.00% | 14.05% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.4% - 6.1% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 2.6% | 3.1% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.44 | 0.87 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 4.40% | 8.10% |
| Tax rate | 11.10% | 17.00% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.4% | 6.1% |
| Selected WACC | 5.3% | |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for HUYA:
cost_of_equity (6.25%) = risk_free_rate (2.85%) + equity_risk_premium (4.70%) * adjusted_beta (0.44) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.