TMTPOST -- Shares of Chinese livestream e-commerce platform East Buy plunged on Monday after circulating rumors about potential related-party transactions and high commission rates sparked investor caution.

The stock, which had been on a steep climb since July, fell as much as 20.89% in after-hours trading, wiping out significant gains built over the past month.

Since early July, East Buy ’ s shares had surged over 212%, reaching levels not seen since March 2023, fueled by strong investor sentiment around the company ’ s self-operated product business and expansion of its in-house platform. However, market confidence was shaken following unverified reports that New Oriental CEO Zhou Chenggang might be under regulatory investigation for alleged related-party dealings, alongside claims that East Buy ’ s commission rates exceeded 30%.

East Buy quickly responded, labeling the rumors about Zhou Chenggang as "completely unfounded" and asserting that the claims about commission rates were "grossly inaccurate," noting that the average commission is actually below 20%. The company confirmed it has initiated both police and legal proceedings regarding the spread of false information.

The stock ’ s recent volatility comes after a series of internal changes that have shaped the company ’ s path toward profitability. Notably, the departure of prominent livestream host Dong Yuhui in July 2024 marked a turning point for East Buy.

At the same time, the company spun off its subsidiary, Yu Hui Tong Xing, which the star livestreamer Dong Yuhui now owns entirely, enabling him to retain profits and avoid acquisition fees. Following his exit, East Buy ’ s stock initially dropped more than 23%, erasing nearly HK$3 billion in market value in a single day.

Despite these concerns, financial results show a steady recovery. East Buy posted operating profit margins of -8%, -1%, and 3% for the first three quarters of fiscal 2025, signaling a gradual shift from losses to profitability. Analysts predict the company ’ s gross merchandise value ( GMV ) for fiscal 2025, running from June 1, 2024, to May 31, 2025, could surpass 7.5 billion yuan, with potential growth to 9 billion yuan in fiscal 2026.

East Buy ’ s transformation has been driven in part by its move toward a self-operated business model. Even before Dong left, founder Yu Minhong had signaled a strategic shift away from dependence on high-profile livestream hosts, emphasizing product quality and supply chain management. In-house product development has expanded from fresh produce and snacks to categories such as health foods, pet supplies, and Chinese-style apparel.

By November 2024, East Buy had launched 600 SKUs of self-operated products, which contributed about 37% of the company ’ s GMV for the six months ending that month. The company reported that since the launch of its self-operated products in April 2022, it has fulfilled more than 210 million orders, serving a customer base of over 30 million. Sales of these products now account for 46% of total revenue, solidifying their role as East Buy ’ s core business.

Recent product successes underscore the growth potential of this strategy. In 2025, East Buy introduced its "100% Cotton Surface Sanitary Pads," which sold 180,000 units and ranked among the top three best-selling in-house products across platforms. According to third-party analytics from Feigua Data, East Buy ’ s GMV in June 2025 reached roughly 880 million yuan, up 28% year-on-year, with self-operated products contributing 350 million yuan, up 15% from the prior year. Shelf-based channels, including Douyin, accounted for nearly 60% of these sales.

The company has also introduced a paid membership program priced at 199 yuan per year, modeled after warehouse club memberships, offering discounts on self-operated products. As of November 2024, paid subscriptions totaled 228,300, helping to stabilize recurring revenue streams.

The shift toward self-operated products and memberships has fueled a dramatic recovery in East Buy ’ s stock price. Since hitting a low of HK$8.92 following Dong Yuhui ’ s resignation, shares soared to a peak of HK$53.7, reflecting investor confidence in the company ’ s strategic pivot.

However, challenges remain. A large portion of sales — 60% to 70% — still depends on the Douyin platform, indicating vulnerability to traffic concentration. Analysts note that sustaining growth requires further diversification of product offerings, enhancement of uniqueness, and continued cultivation of brand identity. Moreover, the end of the traffic dividend from top livestreamers demands that East Buy maintain consumer engagement and drive GMV through its own channels and products.

Industry observers emphasize that East Buy ’ s ability to convert its current momentum into long-term sustainable growth will hinge on balancing product development, platform independence, and customer retention. While the company has made significant strides, the highly competitive livestream e-commerce market leaves little room for error.