Xunlei Limited’s latest quarterly earnings report showcased substantial growth, yet a technical analysis of its stock reveals conflicting signals. The equity gained 1.40% in a recent session, but this advance occurred on lower trading volume, raising questions about its sustainability against a broader downward trend.
Strong Quarterly Performance
The company’s third-quarter financials demonstrated significant year-over-year improvement. Total revenue reached $126.4 million, representing a substantial 57.7% increase. This growth was driven by multiple segments: subscription revenue grew by 22.3%, live streaming and other services surged by 127%, and cloud computing revenue expanded by 45%.
Profitability metrics were notably strong. Net income skyrocketed to $550.1 million, a dramatic rise from the $4.4 million reported in the same quarter last year. Gross profit increased by 50% to $60.5 million, although the gross margin experienced a slight contraction to 47.9%. Company leadership attributed the positive results to a growing subscriber base, higher average revenue per user (ARPU) from premium customers, and expanded international audio live-streaming operations.
Looking ahead, management provided fourth-quarter revenue guidance in the range of $131 million to $139 million.
Conflicting Market Signals
Despite the robust fundamentals, technical indicators paint a more ambiguous picture. A summary of key data points illustrates this dichotomy:
Should investors sell immediately? Or is it worth buying Xunlei?
- Market Valuation (Dec 9): $90.71 million.
- Technical Outlook: Analysts’ three-month price forecast suggests a potential decline of -14.44%.
- Short Interest (Dec 5): The short-sale ratio stood at 11.24%.
- Next Earnings Date: March 11, 2026.
Short-term technical signals, including a pivot bottom identified on November 20 and a three-month MACD buy signal, suggest potential upward momentum. However, these are contrasted by a preponderance of bearish indicators among long-term moving averages and other analytical tools, with 16 bearish signals currently outweighing 10 bullish ones.
The recent price increase on diminished volume is often interpreted as a sign of weak conviction among buyers. Concurrently, the short-interest ratio has decreased to 11.24% amid modest share price appreciation. An analyst rating was adjusted from “Sell” to “Hold/Accumulate” on December 9, a moderate shift that reflects ongoing market uncertainty.
Investment Outlook
In conclusion, Xunlei presents investors with a mixed scenario. The company’s operational and financial performance in Q3 was unequivocally strong, with soaring revenues and profits. Conversely, technical analysis and market sentiment indicators remain cautious, forecasting potential near-term pressure.
The stock’s trajectory leading up to the next earnings release in March 2026 will likely be influenced by trading volume trends, the behavior of key moving averages, and further revisions in analyst sentiment.
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